UC-NRLF 


B    3    12T    b^T 


No.  2958. 


IN  THE 


United  States  Circuit  Court  of  Appeals 


For  the  Ninth  Circuit 


— \ 


SouTHERX  Pacific  Company,  et  al., 

Appellants, 
vs. 

UxiTED  States  of  America, 

Appellee. 


y 


V 


In 

Equity. 


BRIEF  OF  UNITED  STATED    APPELLEE. 


F.  P.  IIOBGOOD,  JR. 

special  Assistant  to  the  Attorney  General, 
Aitorney  for  Appellee. 


aHAHNON-eONMY,  CM  tANtOMf  tT. 


GIFT  or 


//'c^/~/C^^^^n^^y/ 


^^,-•?t-^ 


^ 


i/ 


V 


«•.  »    » 


«  « .  •  •    • 


INDEX 

SUBJECT —  PAGE 

Introductory  1 

History'  of  Selection  List  No.  89 4 

The  contentions  10 

Identity  of  appellant  S.  P.  R.  R.  Co.  with  the  S.  P.  R.  R. 

named  in  the  grant  of  1866 12 

Identity  of  interest  of  S.  P.  R.  R.  Co.  and  S.  P.  Co 12 

Relation  of  Kern  Trading  &  Oil  Co.  to  the  S.  P.  Co.  and  the 

S.  P.  R.  R.  Co 16 

Description  of  lands  in  suit 16 

Rule  of  review  in  appellate  courts 17 

The  errors  assigned 22 

Four  main  divisions  of  argument 23 

I.     Non-investigation  of  character  of  lands  in  suit  by 

the  government  24 

II.     Government  had  not  equal  knowledge  of  the  char- 
acter of  the  lands  in  suit  prior  to  patent 64 

III.     The  lands  in  suit  were  known  mineral  lands 70 

IV.     Fraud    302 

(I)  Non-investigation  hy  government : 

(a)  Withdrawal  of  1900 '. 26 

(b)  Filing  and  rejection  of  list  89 28 

(c)  Appeal  therefrom 29 

(d)  Request  for  relief  from  suspension  order 29 

(e)  Special  agent's  instructions 34 

(f)  His  qualifications  and  reports 40 

(g)  Order  lifting  suspension 48 

(h)   Effect  of  foregoing  proceedings 49 

(II)  Government  had  not  equal  knowledge: 

(1)  Knowledge 64 

(2)  Question  of  reliance  chereon 68 

(III)  TJte  lands  were  known  mineral  Iknds: 

Diamond  Coal  &  Coke  Co.,  ease 71 

Similarity  in  depositioi^  of  coal  and  oil 81 


/f  ri    f  ^  .-, 


INDEX — Continued 

SUBJECT —  PAGE 

Congressional  classification  of  character  of  lands 93 

Reports    of    appellants'    geologists    concerning    per- 
sistence of  oil-sands 103 

The  known  conditions : 

(A)  Conditions  and  knowledge  thereof 108 

(B)  Belief,  general  and  specific 199 

A.     Conditions  and  knowledge  thereof: 

1.  Structure  of  the  lands  in  suit 108 

a.  Anticlinal 108 

b.  Significance  of  anticlinal  structure 115 

c.  Relation  of  accumulation  of  oil  to  structure.—  117 

2.  Favorable  situation  of  lands  with  reference  to  the 
source  of  oil  117 

3.  Evidences  of  oil  in  the  Elk  Hills 120 

a.  Introductorj^ 120 

b.  Seepages,  etc 122 

c.  Significance  thereof  141 

d.  Significance  of  oil  sands 144 

e.  Knowledge  of  Treadwell  &  Owen 145 

4.  Seepages  and  oil  sands  in  the  neighborhood  gen- 
erally   148 

5.  Oil  development  in  the  vicinity  of  the  lands  in  suit  158 

6.  Geological    connection    between    the    neighboring 
lands  and  those  in  suit 162 

7.  Non-agricultural  character  of  the  lands  in  suit....  191 


'»' 


B.     Belief,  general  and  specific: 

General  belief  in  the  oil  character  of  the  lands  in 

suit    201 

Specific   belief   of   appellants   by    its   agents   and 

servants  220 

Scupham  220 

Treadwell    222 

Dumble 226 

Owen  239 

Eberlein    253 

Stone  258 

Burkhalter   260 


INDEX — Continued 

SUBJECT —  PAGE 

Kruttschnitt     261 

Anderson    263 

By  its  acts  in 

Reserving  lands  from  sale   as  agricultural  lands  266 
Constructing  a  railroad  branch-line  from  Bakers- 
field  to  McKittrick  270 

Mineral  locations  --. 274 

Causes    contributing   to    non-development    of    the 
Elk  Hills  279 

1.  Suspension  of  the  lands  from  entry, 

2.  The  low  price  of  oil, 

3.  The  lack  of  transportation  facilities, 

4.  The  lack  of  funds  for  development, 

Summary  outline  of  the  known  conditions 288 

Legal  effect  of  the  known  conditions 289 

Authorities  on  false  representation 291 

Materiality  of  the  non-mineral  affidavits 297 

(IV)     Fraud: 

Introductory  302 

Direct  and  positive  evidence  thereof 303 

Stone's  threats  of  exposure 307 

Eberlein  takes  charge  of  S.  P.  R.  R.  Co.'s  land  office  314 
Connection   between   exhibit   157   and   exhibits  4-Sa 

and  4-Sb  322 

Withholding  production  of  letter  of  Dec.  10,  1903, 

from  Eberlein  to  Chambers  by  appellants 329 

That  letter  produced  and  set  out 332 

Affidavit  of  C.  W.  Eberlein  dated  6/20/1904 344 

Affidavit  of  C.  W.  Eberlein  dated  8/31/1904 345 

Lease,  S.  P.  R.  R.  Co.  to  K.  T.  &  0.  Co.,  dated  8/2/04  346 
Personal  letter,  Eberlein  to  Cornish,  dated  9/3/04....  350 

Details  of  Eberlein-Cornish  conference 359 

The  secret  file  of  correspondence 373 

Discussion  of  the  subject  of  fraud 381 

Concluding  summary   ■. 388 

Ten  propositions  proved  by  the  government 397 


INDEX— Continued 

SUBJECT —  PAGE 

Part  2  of  Brief. 

Development  subsequent  to  patent  of  lands  interspersed 
with  those  in  suit  400 

Successful  welLs  of  the  Associated  Oil  Co.  in  the  Elk  Hills  407 

Diagrammatic  logs  showing  production  of  oil  by  the  Asso- 
ciated Oil  Co.  in  Elk  Hills 412 

Daily  drilling  reports  showing  production  of  oil  by  Asso- 
ciated Oil  Co.  in  Elk  Hills 417 

Unsuccessful  wells  drilled  in  the  Elk  Hills 434 

The  true  character  of  the  wells  mentioned  in  "Appellants' 

Brief  Upon  the  Facts" 437 

Conclusion  of  Subsequent  Development 440 

Addendum. 

No  hearing  was  had  before  the  Land  Officers 446 

Fraudulent  acts  of  S.  P.  R.  R.  Co.,  in  prevention  of  contest 

over  its  selection  of  neighboring  lands 447 


o 


Table  of  Cases. 

Ainslie  vs.  Medlycott,  6  Yes.  13 292 

Bahcock  vs.  DeMott,  160  Fed.  882 20 

Bennett  vs.  Judsan,  21  X.  Y.  238 292 

Book  vs.  Justice  Mining  Co.,  58  Fed.  106 443 

Cosmos  Exp.  Co.  vs.  Graij  Eagle  Oil  Co.,  104  Fed.  20 

_ _ 298,  299.  395 

Colo.  Coal  &  Fuel  Co.  vs.  V.  S.  123  U.  S.  307 388 

Cowell  vs.  Lammers,  21  Fed.  206 394 

Castle  vs.  Wimhle,  19  L.  D.  455 443 

Cascaden  vs.  Bartolis,  146  Fed.  739 443 

Diamond  Coal  &  Coke  Co.  vs.  U.  S.,  233  U.  S.  236 ;  58  Law. 

Ed.  936,  18,  57,  70,  391 

DeLaval  vs.  Iowa  Co.  194  Fed.  423 20 

Davis,  vs.  Weibbold,  139  U.  S.  507 388 

Deffehach  vs.  Hawke,  115  U.  S.  392 388 

East  Tintic  Cons.  Min.  Co.  43  L.  D.  79 443 

Foley  vs.  Kilhourne,  222  Fed.  761 19 

Francouer  vs.  Newhouse,  40  Fed.  621 394 

Harrison  vs.  Fete,  148  Fed.  781 20 

Harper  vs.  Taijlor,  193  Fed.  944 20 


INDEX— Continued 

SUBJECT —  PAGE 

Harding  vs.  Randall,  15  Me.  332,  335 292 

Iowa,  State  of,  vs.  Carr,  191  Fed.  257 20 

Lehigh  Zinc  Co.  vs.  Bamford,  150  U.  S.  665.  673 294 

Lange  vs.  Robinson,  148  Fed.  799 443 

Mastin  vs.  Noble,  157  Fed.  506 20 

Miller  vs.  Chrisman,  140  Cal.  440;  197  U.  S.  313 393,  442 

Nevada  Sierra  Oil  Co.  vs.  Home  Oil  Co.  98  Fed.  673  443 

Santa  Rita,    The  176   Fed.    890 20 

Smoot  vs.  llberxj,  10  M&W  10 292 

Smith  vs.  Richards,  13  Pet.  25.  36,;  10  Law.  Ed.  42 294 

Tulare  Oil  &  Mining  Co.  vs.  S.  P.  R.  R.  Co.  20  L.  D.  269 

___ 59.     447 

U.S.  vs.  Marshall,  210  Fed.  595 19,  21 

V.  S.  vs.  Booth-Kelly  Lbr.  Co.  203  Fed.  423 20,  22,  54 

V.  S.  vs.  Minor,  114  U.  S.  377;  29  Law.  Ed.  110....56,  58,  64,  447 

V.  8.  vs.  So.  Pfic.  Co.  (D.  C.)  225  Fed.  197 393 

V.  S.  vs.  Culver,  52  Fed.  81 395 

Washington  Securities  Co.  vs.  U.  S.,  234  U.  S.  76:  58  Law. 

Ed.  1220  - 55,  447 

Other  Citations. 

Act  of  Congress.  July  27,  1866,  14  St.  at  L.  292 1 

Joint  Resolution,  June  28,  1870,  16  St.  at  L.  382 2 

Act  of  Congress,  Feb.  29,  1895.  28  St.  at  L.  683 94 

Act  of  Congress.  June  25,  1910,  36  St.  at  L.  847 411 

Dept.  of  Interior  Regulation  of  July  9,  1894,  19  L.  D.  21 

3,  64,  297,  298,  446 

Bigelow  on  Fraud,  Sees.  599.  615 291 

Excerpts  from  Judge  Bean's  opinion 24,  302 

Kerr  on  Fraud  and  Mistake,  Sees.  53-56 291,  292 

Pickett  Act  (Act  of  Congress  June  25,  '10),  36  St.  at  L.  847  411 

Pomeroy's  Equity  Jurisprudence,  3rd  Ed 292,  293 

U.  S.  Rev.  Statutes,  Sections  2320,  2329 '....393,  394 

0&,X::::v3vsGgeC..H3 ()....  123456  123456  23456  5  456  4566  46 


J     9-     '     » 
J     »  ,    '     ' 


No.  2958. 


IN    THE 

United  States  Circuit  Court  of  Appeals 

For  the  Ninth  Circuit 


•>v 


Southern  Pacific  Company,  et  al., 

Appellants, 
vs. 

United  States  of  America, 

Appellee. 


> 


In 
Equity. 


BRIEF  OF  UNITED  STATES,   APPELLEE. 


Statement  of  the  Case. 

This  suit  in  equity  was  brought  by  the  United 
States  on  the  tenth  day  of  December,  1910,  to  the 
end  that  a  decree  might  be  obtained  annulling  and 
cancelling  patent  No.  135  to  public  lands  issued  to 
the  Southern  Pacific  Railroad  Company  on  the 
twelfth  day  of  December,  1904,  and  procured,  as 
the  bill  charges,  in  the  execution  of  a  fraudulent 
scheme  to  acquire  mineral  lands  upon  the  represen- 
tation that  they  were  non-mineral  and  of  the  char- 
acter contemplated  by  the  grant  of  July  27,  1866, 14 
Stat,  at  Large  292,  and  the  joint  resolution  of  June 


s. 


28,  1870,  16  Stat,  at  Large  382,  No.  87.  The  immedi- 
ately pertinent  provision  is  the  grant  to  the  Southern 
Pacific  Eaih'oad,  a  company  incorporated  under  the 
laws  of  the  State  of  California  of  which  the  appellant 
Southern  Pacific  Eailroad  Company  is  admitted  hy 
paragraph  four  of  the  answer  to  be  the  successor  in 
interest,  of  every  alternate  section  of  public  land  not 
mineral,  designated  by  odd  numbers,  to  the  amount 
of  ten  alternate  sections  of  land  per  mile  on  each  side 
of  said  railroad  passing  through  any  state,  together 
with  suitable  provisions  for  indemnity  or  lieu  lands, 
to  be  selected  under  the  direction  of  the  Secretary 
of  the  Interior,  in  alternate  sections  and  designated 
by  odd  numbers  not  more  than  ten  miles  beyond  the 
limits  of  the  primary  grant  in  cases  in  which,  by 
reason  of  pre-emption,  reservation  or  prior  grant  or 
sale,  there  occurred  a  failure  in  the  primary  grant; 
as  also  the  following  provision : 

Provided  further,  That  all  mineral  lands  be 
and  the  same  are  hereby  excluded  from  the  op- 
eration of  this  act  and,  in  lieu  thereof,  a  like 
">  quantity   of   unoccupied   agricultural    lands   in 

odd  numbered  sections  nearest  to  the  line  of  said 
road  and  within  twenty  miles  thereof  may  be 
selected  as  above  provided. 

The  lands  in  suit,  comprising  about  six  thousand 
acres  and  including  parts  of  sections  17  and  19  and 
all  of  sections  15,  21,  23,  25,  27,  29,  33  and  35  of 
Township  30  South,  Range  23  East,  Mount  Diablo 
Base  and  Meridian,  are  within  the  so-called  indem- 
nity limits  of  the  grant  and  were,  therefore,  subject 
to  selection  by  the  railroad  under  the  direction  of 


3 

the  Secretary  of  the  Interior  in  lieu  of  lands  within 
the  so-called  primary  limits  lost  to  the  railroad  by 
reason  of  any  of  the  exceptions  mentioned  in  the 
grant,  provided  they  were  not  mineral  lands  and 
therefore  within  the  exclusion  of  the  proviso  above 
set  out.  They  are  situated  in  a  range  of  hills  locally 
known  as  the  Elk  Hills  and  customarily  so  desig- 
nated and  referred  to  in  the  record;  and  the  town- 
ship itself  is,  for  brevity,  herein  designated  as 
''30-23." 

July  9, 1894,  pursuant  to  authority  vested  in  him  by 
the  granting  act,  the  Secretary  of  the  Interior  pro- 
mulgated the  following  regulation  with  reference 
to  railroad  selections: 

"Where  the  lands  selected  by  the  company  are 
within  a  mineral  belt  or  proximate  to  any  min- 
ing claim,  the  railroad  company  will  be  required 
to  file  with  the  local  land  officers  an  affidavit  by 
the  land  agent  of  the  company,  which  affidavit 
shall  be  attached  to  said  list  when  returned,  set- 
ting forth  in  substance  that  he  has  caused  the 
lands  mentioned  to  be  carefully  examined  by  the 
agents  and  emplo3^es  of  the  company  as  to  their 
mineral  or  agricultural  character  and  that,  to 
the  best  of  his  knowledge  and  belief,  none  of 
the  lands  returned  in  said  list  are  mineral 
lands."    19  L.  D.  21. 


HISTORY  OF  LIST  NO.  89. 

The  Southern  Pacific  Railroad  Company  first  filed 
in  the  United  States  Land  Office  at  Visalia,  Cali- 
fornia, its  list  of  selection  of  the  lands  in  suit  No- 
vember 14,  1903  (Ex.  12  M;  E.  3752).  This  list  re- 
ceived the  number  89  and  throughout  was  designated 
as  List  No.  89.  In  accordance  with  the  regulation 
of  the  Secretary  of  the  Interior  of  July  9,  1894, 
supra,  it  was  accompanied  by  the  affidavits  of  the 
railroad's  acting  land  agent,  Charles  W.  Eberlein, 
following : 

State  of  California, 
City  and  County  of  San  Francisco — ss. 

I,  Charles  W.  Eberlein,  being  duly  sworn,  de- 
pose and  say  that  I  am  the  Acting  Land  Agent 
of  the  Southern  Pacific  Railroad  Company,  suc- 
cessor by  consolidation  to  the  Southern  Pacific 
Railroad  Company  (of  California) ;  that  the 
foregoing  list  of  lands  which  I  hereby  select  is 
a  correct  list  of  a  portion  of  the  public  lands 
claimed  by  the  said  Southern  Pacific  Railroad 
Company,  successor  as  aforesaid,  as  inuring  to  it 
to  aid  in  the  construction  of  the  railroad  of  said 
company  from  Lerdo  to  Sumner  for  which  a 
grant  of  lands  was  made  by  the  acts  of  Congress 
approved  July  27,  1866,  July  25,  1868,  and  June 
28,  1870,  as  aforesaid;  that  the  said  lands  are 
vacant,  unappropriated,  and  are  not  interdicted 
mineral  or  reserved  lands,  mid  ewe  of  the  char- 
acter contemplated  hy  the  grant,  being  within 
the  limits  of  the  exterior  ten  (10)  miles  in- 
demnity belt,  on  each  side  of  the  line  or  route 
for  a  continuous  distance  of  twenty  (20)  miles, 
being  for  the  sixth  (6th)  section  of  said  road, 
starting  from  a  point  in  the  N.  E.  14  of  Section 
9,  T.  28  S.,  R,  26  E.,  M.  D.  B.  and  M.,  and  end- 
ing at  a  point  in  the  N.  E.  i/4  of  Section  5,  T. 


30  S.,  R.  29  E,  M.  D.  B.  and  M.,  and  that  the 
specific  losses  for  which  indemnity  is  claimed 
are  tnih^  set  forth  and  described  in  said  list, 
and  that  said  losses  have  not  heretofore  been  in- 
demnified in  any  manner. 
(Ink  hand-writing)      Charles  W.  Eberlein 

(Seal) 

Sworn  and  sii])seribed  to  before  me  this  7th 
day  of  November,  1903.  Witness  my  hand  and 
notarial  seal. 

(Ink  hand-writing)  E.  B.  Ryan, 

Not  aril  Public  in  and  for  the  City  and  County 

of  San  Francisco,  State  of  California. 
(Notarial  seal) 
(R.  3829-30). 


State  of  California, 
City  and  County  of  San  Francisco — ss. 

Charles  W.  Eberlein,  being  duly  sworn,  de- 
poses and  says  that  he  is  the  acting  land  agent  of 
the  Southern  Pacific  Railroad  Company,  that  he 
has  caused  the  lands  selected  in  said  company's 
List  No.  89  to  be  carefully  examined  by  the 
agents  and  employees  of  said  company  as  to 
their  mineral  or  agricultural  character,  and  that 
to  the  best  of  his  knowledge  and  belief,  none  of 
the  lands  returned  in  said  list  are  mineral  lands. 

(Ink  hand-writing)      Charles  W.  Eberlein. 

Subscribed  and  sworn  to  before  me  this  7tb 
day  of  November,  1903. 

(Ink  hand-writing)  E.  B.  Ryan, 

Notary  Public  in  and  for  the  City  and  County 

of  San  Francisco,  State  of  California. 
(Notarial  seal) 
(R.  3831-3). 


6 

This  list  was  rejected  November  17,  1903  (E. 
3756),  by  the  Eegister  and  Eeeeiver  for  the  reason 
that  the  lands  mentioned  in  the  attempted  selection 
were  embraced  in  the  telegraphic  order  of  the  Com- 
missioner of  the  General  Land  Office  of  February 
28,  1900,  by  which  the  Eegister  and  Eeeeiver  at 
Visalia  had  been  instructed  to  "suspend  from  dis- 
position until  further  orders"  a  large  body  of  lands 
including  the  entire  township  of  which  the  lands  in 
suit  are  a  part  (Ex.  QQQ — E.  1524-5).  (Counsel  for 
appellants  referred  below  to  this  order  as  a  "with- 
drawal from  all  forms  of  agricultural  entry" — with- 
out reason,  as  is  manifest  from  the  words  "suspend 
from  disposition"  without  accompanying  words  of 
limitation  or  explanation.)  This  order  was  in  full 
force  and  effect  at  the  time  of  the  filing  of  said  list 
and  its  rejection  (E.  3757).  From  the  order  of  re- 
jection the  railroad  appealed  December  11,  1903  (Ex. 
12-N— E.  3757,  3834),  to  the  Commissioner  of  the 
General  Land  Office.  The  township  in  cpiestion  was, 
by  order  of  the  Assistant  Commissioner  of  the  Gen- 
eral Land  Office,  "relieved  from  suspension"  Feb- 
ruary 11,  1904  (Ex.  ZZZ— E.  1555-6,  3757,8),  and 
February  20,  1904  (Ex.  4-A--E.  1557-8,  3757-8); 
also  April  5,  1904  (Ex.  4-C— E.  1568-9-70),  follow- 
ing a  request  of  D.  A.  Chambers,  attorney  for  the 
Southern  Pacific  Eailroad  Company,  of  November 
30,  1903,  addressed  to  the  Commissioner  of  the  Gen- 
eral Land  Office,  that  "a  special  agent  be  instructed 
to  at  once  examine  said  lands" — the  identical  lands 
in  suit — "and  report  thereon  to  your  office."  The 
specific  directions  by  the  Commissioner  to  the  spe- 


cial  agent  were  to  "examine  the  lands  in  question  and 
thereafter  submit  report  to  this  office  stating  whether 
or  not  in  your  opinion  the  same  should  he  relieved 
from  suspension/'     (Italics  supplied.) 

February  20,  1904,  the  Coromissioner  wrote  the 
Eegister   and    Receiver   at    Visalia    advising   them 
that  their  action  in  rejecting  the  application  to  se- 
lect "was  correct  under  conditions  then  existing", 
(November  17,  1903),  but  that  the  lands  sought  to 
be  selected  had  been  subsequently  "relieved  from 
suspension"  and  that  "it  would  therefore  appear 
that  said  application  to  select  may  now  be  granted 
if  no  other  objection  thereto  exists.     Quasi-Gontest 
No.  2555  is  accordingly  hereby  closed  and  selection 
list  No.  89  herewith  returned  for  appropriate  ac- 
tion."   (Ex.  12-0;  E.  3834-5,  3868-9.)     The  list,  thus 
returned,  was  accepted  by  the  Register  at  Visalia 
February  26,  1904,  and  Eberlein,  the  railroad's  act- 
ing land  agent,  was  so  notified  by  letter  dated  March 
5, 1904.    (Ex.  12-P ;  R.  3836-7,  3767,  3769-70.)    Later 
in  the  General  Land  Office  it  was  discovered  that 
there  were  errors  or  informalities  in  the  assignment 
of  the  base-lands  upon  whose  loss  the  selection  of 
the  lands  in  list  89  was  predicated  and  thereupon, 
on  September  6,  1904,  a  new  application  to  select 
'  was  filed  in  the  land  office  at  Visalia  for  the  iden- 
tical lands  in  the  former  application  and  now  in  suit, 
but  containing  a  new  or  re-arranged  assigmnent  of 
base  lands  and  accompanied  by  the  following  affi- 
davits by  Eberlein,  the  railroad's  acting  land  agent 

(Ex.  12-Q— R.  3771-2)  : 


8 

State  of  California, 
City  and  County  of  San  Francisco — ss. 

I,  Charles  W."  Eberlein,  being  duly  sworn,  de- 
pose and  say :  that  I  am  the  acting  land  agent  of 
the   Southern  Pacific  Eailroad  Company,   suc- 
cessor by  consolidation  to  the  Southern  Pacific 
Eailroaci   Company    (of   California) ;   that   the 
foregoing  list  of  lands  which  I  hereby  select  is 
a  correct  list  of  a  portion  of  the  public  lands 
claimed  by  the  said  Southern  Pacific  Eailroad 
Company,  successor  as  aforesaid,  as  inuring  to 
it  to  aid  in  the  construction  of  the  railroad  of 
said  company  from  Lerdo  to  Sumner  for  which 
a  grant  of  lands  was  made  by  the  Acts  of  Con- 
gress approved  July  27,  1866,  July  25,  1868,  and 
June  28,  1870,  as  aforesaid;  that  the  said  lands 
are  vacant,  unappropriated,  and  are  not  inter- 
dicted mineral  or  reserved  lands,  and  are  of  the 
character  contemplated  by  the  grant,  being  with- 
in the  limits  of  the  exterior  ten  (10)  miles  in- 
demnity belt,  on  each  side  of  the  line  of  route 
for  a  continuous  distance  of  twenty  (20)  miles, 
being  for  the  sixth  (6th)  section  of  said  road, 
starting  from  a  point  in  N.  E.  i/4  of  Section  9, 
T.  28  S.,  E.  26  E.,  M.  D.  B.  and  M.,  and  ending 
at  a  point  in  the  N.  E.  14  of  Section  5,  T.  30  S., 
E.  29  E.,  M.  D.  B.  and  M.,  and  that  the  specific 
losses  for  wdiich  indemnity  is  claimed  are  truly 
set  forth  and  described  in  said  list,  and  that  said 
losses  have  not  heretofore  been  indemnified  in 
any  manner. 
(Seal) 
(Ink  hand-writing)        Charles  W.  Eberlein 

Sworn  to  and  subscribed  before  me  this  31st 
day  of  August,  1904. 

(Ink  hand-writing)  E.  B.  Eyan, 

Notary  Puhlic  in  and  for  the  City  and  County  of 
San  Francisco,  State  of  California. 

(Notarial  seal) 
(E.  3847-8). 


state  of  California, 
City  and  County  of  San  Francisco— ss. 

Charles  W.  Eberlein  being  duly  sworn  de- 
poses and  says  that  he  is  the  acting  land  agent 
of  the  Southern  Pacific  Eailroad  Company ;  that 
he  has  caused  the  lands  selected  in  said  com- 
pany's list  No.  89  to  be  carefully  examined  by 
the 'agents  and  employees  of  said  company  as 
to  their  mineral  or  agricultural  character,  and 
that  to  the  best  of  his  knowledge  and  belief, 
none  of  the  lands  returned  in  said  list  are  min- 
eral lands. 
(Ink  hand-writing)       Charles  ^Y.  Eberlein. 

Subscribed  and  sworn  to  before  me  this  31st 
dav  of  August,  1904. 

(Ink  hand-writing)  E.  B.  Ryan 

Notary  Piihlic  in  and  for  the  City  and  County  of 

San  Francisco,  State  of  California. 
(Notarial  seal) 
(E.  3850-1). 

Patent  thereafter,  December  12,  1901,  numbered 
135  issued  to  the  Southern  Pacific  Railroad  Com- 
pany and  is  the  instrument  annulled  and  cancelled 
by  the  decree  from  which  this  appeal  is  prosecuted. 
That  it  is  based  upon  the  selection  list  accepted  by 
the  Register  and  Receiver  at  Visalia  September  12, 
1904,  and  not  upon  the  list  filed  while  the  lands  were 
under  suspension  from  disposition,  appears  from  the 
testimony  of  E.  C.  Finney,  an  assistant  attorney  in 
the  office  of  the  Assistant  Attorney  General  of  the 
Interior  Department  (R.  1589).  This  further  ap- 
pears from  the  fact  that  the  description  in  the  pa- 
tent of  the  lands  agrees  with  that  in  the  list  of  Sep- 
tember 6,  1904,  but  not  with  the  description  in  the 
list  filed  November  14,  1903  (R.  3775-6).  A  photo- 
graphic copy  of  the  patent  was  filed  as  Exhibit  4-G. 


10 


CONTENTIONS. 

The  bill  charges  in  substance  that  this  patent  was 
obtained  by  the  fraud  of  appellants  in  falsely  rep- 
resenting through  the  affidavits  of  the  acting  land 
agent  of  the  Southern  Pacific  Eailroad  Company 
that  the  lands  described  in  it  and  now  in  suit  were 
not  interdicted  mineral  lands  and  were  of  the  char- 
acter contemplated  by  the  grant  and  that  he,  the  act- 
ing land  agent,  had  caused  them  to  be  carefully  ex- 
amined by  the  agents  and  employees  of  the  railroad 
company  as  to  their  mineral  or  agricultural  char- 
acter and  that,  to  the  best  of  his  knowledge  and  be- 
lief, none  of  them  was  mineral  land;  that  the  pur- 
pose and  effect  of  these  affidavits  were  to  deceive  the 
land  officers  of  the  government ;  that  they  relied  upon 
them  and,  in  such  reliance,  issued  the  patent ;  that  all 
of  the  lands  were  and  are  mineral  lands  and  were 
known  to  be  such  at  the  time  of  the  proceedings 
which  resulted  in  the  patent;  and  that  their  true 
character  was  known  to  appellants. 

While  upon  this  record  it  conclusively  appears  not 
only  that  the  lands  in  suit  were  mineral  lands  and 
known  to  be  such  at  the  time  of  the  proceedings 
which  resulted  in  patent,  but  that  the  appellants, 
Southern  Pacific  Railroad  Company,  their  officers 
and  agents,  knew  their  mineral  character  and  cov- 
eted and  sought  to  and  did  acquire  them  on  account 
thereof  and  in  defiance  of  the  exception  in  the  grant 
under  which  they  claimed,  it  was  only  necessary  that 
the  government  show  by  proper  and  relevant  evi- 


11 

denee  that  the  lands  were  known  mineral  lands  and 
that  appellants  either  knew  their  true  character  or 
could,  by  the  exercise  of  the  diligence  imposed  upon 
them  by  the  terms  of  the  grant  and  the  regulation  of 
the  Secretary  of  the  Interior  and  in  the  discharge 
of  the  duty  which  their  relationship  to  the  goyern- 
ment  dictated,  haye  ascertained  it.  If  the  lands 
were  known  mineral  lands,  the  affidayits  in  question 
were  false;  and,  if  they  were  false,  the  legal  result 
is  the  same,  whether  they  were  knowingly  false  or 
were  made  in  ignorance  of  ascertainable  facts  which 
it  was  the  duty  of  appellants  to  know. 

Accordingly,  the  only  burden  resting  upon  the 
goyernment  at  the  trial  was  to  show  by  ''that  class 
of  eyidence  which  commands  respect  and  that 
amount  of  it  which  produces  conyiction"  that  the 
lands  in  suit  were  at  the  time  of  the  proceedings 
which  resulted  in  the  patent  known  mineral  lands 
and,  therefore,  within  the  exception  in  the  grant  of 
mineral  lands  other  than  coal  and  iron.  It  will  be 
the  purpose  of  this  brief  to  demonstrate  that  not  only 
was  this  burden  borne  by  the  goyermnent,  but  that 
the  record  is  entirely  conyincing  that  appellants 
knew  the  interdicted  mineral  character  of  the  lands 
and,  knowing  it,  falsely  represented  that  they  were 
non-mineral  agricultural  lands  of  the  character  con- 
templated by  the  grant. 


12 

IDENTITY  OF  APPELLANT  SOUTHERN  PACIFIC  RAILROAD 
COMPANY  WITH  THE  SOUTHERN  PACIFIC  RAILROAD 
NAMED  IN  THE   GRANT   OF  1866. 

Paragraph  four  of  tlie  ''joint  and  several  answer 
of  all  defendants  other  than  the  Equitable  Trust 
Company  of  New  York,"  read  in  connection  with 
paragraph  four  of  the  bill,  would  seem  to  establish 
by  admission  the  legal  identity  of  the  appellant 
Southern  Pacific  Railroad  Company  and  the  cor- 
poration of  like  name  mentioned  in  the  granting  act. 
If  doubt  remains,  it  is  set  at  rest  by  Exhibits  11-E 
and  11-F,  being  respectively  a  certified  copy  of  the 
articles  of  Incorporation  and  Consolidation  of  the 
Southern  Pacific  Railroad  Company  (of  California), 
the  Southern  Pacific  Railroad  Company  (of  Ari- 
zona), and  the  Southern  Pacific  Railroad  Company 
(of  New  Mexico)  filed  in  the  office  of  the  Secretary  of 
State  March  8, 1902,  and  a  certified  copy  of  Amended 
Articles  of  Incorporation  and  Consolidation  of  the 
Southern  Pacific  Railroad  Company  filed  in  the 
office  of  the  Secretary  of  State  August  28,  1905. 

IDENTITY    OF    INTEREST    OF    SOUTHERN    PACIFIC    RAILROAD 
COIVrPANY  AND  SOUTHERN  PACIFIC  COMPANY. 

The  Southern  Pacific  Company  was  incorporated 
in  1884  "for  the  purpose  of  unifying  in  manage- 
ment lines  of  railroad  extending  from  New  Orleans, 
Louisiana,  to  San  Francisco,  California,  to  Poi^- 
land,  Oregon,  and  to  Ogden,  Utah."  This  appears 
from  Manual  No.  1  for  the  year  1902  of  the  South- 
ern Pacific  and  Auxiliary  Companies  issued  to  its 
officers,  Ex.  Ill  (R.  1344).    This  manual  was  issued 


13 

July  1,  1902,  and  is  from  the  files  of  the  Secretary  of 
the  Southern  Pacific  Company.  In  it,  on  page  1344, 
under  the  caption  "Controlled  Properties,"  appears 
the  following: 

"The  Southern  Pacific  Company  is  the  prin- 
cipal owner  of  the  capital  stock  of  the  follow- 
ing companies  and  operates  them  under  lease 
to  it: 

Central  Pacific  Eailway 
Oregon  and  California  Eailroad 
Southern  Pacific  Railroad  of  California 
Southern  Pacific  Railroad  of  Arizona 
Southern  Pacific  Railroad  of  New  Mexico 
Southern  Pacific  Coast  Railway. 

The  Southern  Pacific  is  also  the  principal 
owner  of  the  capital  stock  of  the  following  com- 
panies which  are  operated  by  their  own  organi- 
zations, yiz: 

Galveston,  Harrisburg  &  San  Antonio  Rail- 
way 
Texas  and  New  Orleans  Railroad 
New  York,  Texas  and  Mexican  Railway." 

The  same  manual  (R.  1345),  shows  the  following: 


u 


In  March,  1902,  the  Southern  Pacific  Rail- 
road of  California,  the  Southern  Pacific  Rail- 
road of  Arizona,  and  the  Southern  Pacific  Rail- 
road of  New  Mexico  were  consolidated  into 
a  new  California  company,  the  Southern  Pacific 
Railroad  Company 


?? 


Subsequent  manuals,  for  the  years  1903  to  1909, 
inclusiye,  constitute  exhibits  "JJJ"  to  "PPP,"  in- 
clusive (R.  1355-1462),  and  show  the  continuation 
throughout  the  period  covered  by  them  of  the  con- 
ditions of  operation  and  control  by  the   Southern 


14 

Pacific  Company  of  the  Southern  Pacific  Eailroad 
Company  set  out  in  manual  number  one  above 
quoted. 

From  the  foregoing  the  absolute  control  and  opera- 
tion by  the  Southern  Pacific  Company  of  all  of  the 
properties  of  the  Southern  Pacific  Railroad  Com- 
pany is  beyond  question.  Indeed,  the  govermnent 
understands  that  it  is  not  denied  by  appellants  that 
since  about  1885  the  Southern  Pacific  Company  has 
controlled  and  operated  the  Southern  Pacific  Rail- 
road Company  and  all  of  its  properties,  including  the 
lands  granted  by  the  granting  act  in  question;  and 
that  in  large  measure  officers  of  the  one  have  been 
throughout  that  period  officers  of  the  other.  Fur- 
thermore, Mr.  Julius  Kruttschnitt,  who  testified  as  a 
witness  for  appellants  April  7,  1913,  being  at  that 
time  Chairman  of  the  Executive  Committee  of  the 
Board  of  Directors  of  the  Southern  Pacific  Com- 
pany, stated  that  from  the  autunm  of  1901  to  April 
1,  1904,  he  was  vice-president  and  assistant  to  the 
president  of  the  Southern  Pacific  Company,  being  ^ 
located  at  San  Francisco,  and  had  charge  of  the  ex- 
ploitation of  oil  lands  and  the  production  of  oil  for 
fuel  purposes  of  the  railroad  company  (R.  3080) 
and  that  both  the  president  of  the  Southern  Pacific 
Company  and  the  president  of  the  Southern  Pacific 
Railroad  Company  had  instructed  him  and  those 
under  him  to  go  on  the  Southern  Pacific  Railroad 
Company's  grant  lands  and  develop  oil   (R.  3102). 

It  was  C.  H.  Markham,  general  manager  of  the 
Southern  Pacific   Company,   who   in   1904  insisted 


15 

that  Eberlein  execute  the  lease  to  the  Kern  Trading 
&  Oil  Company  of  Southern  Pacific  Railroad  Com- 
pany lands,  (Exhibits  II— R.  1050-1;  KK— R.  1053- 
4-5-6;  LL— R.  1059-60;  MM— R.  1061;  NX— R.  1063- 
4;  QQ— R.  1069;  RR— R.  1070-1). 

W.  D.  Cornish  was  in  1903  and  1904  vice-presi- 
dent of  the  Southern  Pacific  Company  and  the  su- 
perior officer  of  Eberlein,  the  Southern  Pacific  Rail- 
road Company's  acting  land  agent  (R.  1091,  1132; 
also  R.  1095-6). 

E.  E.  Calvin  was  vice-president  and  general  man- 
ager of  the  Southern  Pacific  Company  and  called 
upon  Eberlein  for  lists  of  lands  of  the  Southern 
Pacific  Railroad  Company  (R.  1098). 

Eberlein,  the  railroad  company's  acting  land 
agent,  had  a  room  and  desk  at  120  Broadway,  New 
York  City,  the  New  York  office  of  the  Southern 
Pacific  Company  (R.  1271). 

There  was  only  one  law  department,  that  of  the 
Southern  Pacific  Company  '^ presided  over"  by 
William  F.  Herrin^  and  it  was  as  well  the  law  de- 
partment of  the  Southern  Pacific  Railroad  Company 
(R.  1310). 

It  is  needless  to  further  multiply  references  to 
the  record  to  prove  the  palpable  fact  that  the  South- 
ern Pacific  Railroad  Company  was  dominated  and 
controlled  b}^  the  Southern  Pacific  Company  and 
that  the  officers  of  the  latter  did  as  thev  listed  with 


16 

the  properties  of  the  former.  Indeed,  Mr.  Kriitt- 
sclinitt  admitted  that  every  share  of  the  stock  of 
the  Southern  Pacific  Railroad  Company  was  owned 
by  the  Southern  Pacific  Company  (R.  3087-8). 

RELATION  OF  THE  KIERN  TRADING  &  Dili  COMPANY  TO  THE 
SOUTHERN  PACIFIC  COMPANY  AND  SOUTHERN  PACIFIC 
RAILROAD    COMPANY. 

The  Kern  Trading  &  Oil  Company  was  organized 
May  22,  1903,  and  was  then  and  since  then  has  at  all 
times  been  owned  by  the  Southern  Pacific  Company. 
It  first  appears  in  the  manuals  of  the  "Southern 
Pacific  Company  and  Auxiliaries"  for  the  year  1903 
(R.  1357-8)  and  is  carried  in  all  subsequent  manuals. 
Mr.  Kruttschnitt  testified  that  it  and  the  Rio  Bravo 
Oil  Compam^  "were  really  departments  of  the  com- 
pany (Southern  Pacific  Company)  for  exploiting  oil 
lands  and  producing  oil  for  fuel  purposes — for  fuel 
for  the  railroad."  The  government  understands  that 
it  is  conceded  by  counsel  for  appellants  that  the 
company  was  no  more  than  the  "fuel  department" 
of  the  Southern  Pacific  Company  and  that  its  officers 
and  servants  were  chosen  and  its  acts  and  opera- 
tions directed  and  controlled  solely  by  the  latter 
company. 

DESCRIPTION   OF   LANDS  IN   SUIT. 

The  Elk  Hills,  in  which  lies  the  township  of  which 
the  lands  in  suit  are  odd  numbered  sections  of  the 
southern  half,  is  a  range  of  hills  in  Kern  County, 
California,  approximately  sixteen  miles  long  and  of 
six  or  seven  miles  maximum  width.     Rising  rather 


17 

abruptly  from  the  San  Joaquin  valley  on  the  east 
side  to  an  elevation  of  a  thousand  or  twelve  hundred 
feet  and  separated  from  the  neighboring  Buena 
Vista  Hills  to  the  south  bv  a  relativelv  level  vallev 

fc'  «,'  •/ 

lying  somewhat  to  the  southwest,  their  trend  is 
northwest  and  southeast  and  they  are  plainly  seen 
from  McKittrick,  Taft  and  Maricopa,  towns  often 
referred  to  in  the  record  and  situated  in  the  midst 
of  developed  oil  fields.  The  region  is  one  of  low 
rainfall,  the  average  yearly  precipitation  being  only 
two  inches,  and  is  a  broken,  semi-arid  desert.  Erosion 
there  is  very  slight,  insomuch  that  it  appeared  at 
the  trial  in  1912  that  these  hills  were  then  in  es- 
sentially the  same  condition  as  during  the  period  of 
the  proceedings  that  resulted  in  patent  (R.  688-9. 
Veatch;  1004),  with  the  exception  of  such  changes 
as  had  been  wrought  by  the  hand  of  man.  The 
Temblor  range  is  the  principal  uplift  in  the  sur- 
rounding country  and  the  Elk  Hills  at  their  west- 
erly end  are  within  a  short  distance  of  it.  More  de- 
tailed description  of  the  geographical  and  other  con- 
ditions may  be  found  in  the  record  in  the  testimony 
of  B.  K.  Lee  at  pages  225-6,  S.  P.  Wible  at  pages 
320-1,  and  F.  O.  Martin  at  page  612. 

THE  RULE  OF  REVIEW  IN  APPELLATE  COURTS. 

The  govermnent  is  mindful  of  ''the  dignity  and 
character  of  a  patent  from  the  United  States"  and 
that  it  is  not  to  be  lightly  set  aside.  It  is  fully  ad- 
vertent to  the  decisions  which  require  that,  to  can- 
cel and  annul  such  an  instrument,  the  government 
shall  bear  the  burden  of  proof  and  shall  sustain  it 


18 

by  that  class  of  evidence  which  commands  respect 
and  that  amount  of  it  which  produces  conviction.  It 
is  confidently  submitted  that,  in  determining  that 
this  burden  was  supported  and  that  the  material 
allegations  of  the  bill  were  proven  at  the  trial  by 
evidence  of  the  class  and  amount  prescribed  and  in 
rendering  in  favor  of  the  United  States  the  chal- 
lenged decree,  the  trial  judge  committed  no  error. 

In  the  case  of  Diamond  Coal  &  Coke  Co.  vs.  United 
States,  233  U.  S.  236;  58  L.  Ed.  936,  as  in  every 
other  case  in  which  the  government  has  sued  to  set 
aside  a  patent,  the  solemnity  of  the  government's 
own  assurances  of  title  has  been  stressed  by  those 
resisting  the  decree  of  annulment  and  rescission ;  and 
it  is  not  novel  that  insistence  in  the  instant  case  is 
directed  to  this  ]3oint.  It  is  to  be  presumed  that  the 
trial  judge  gave  due  consideration  to  this  rule  so 
elaborately  invoked  below  and  now  here  and  came 
to  the  conclusion  that  the  govermnent  had  proved  its 
case  by  evidence  quantitatively  and  qualitatively 
responsive  to  the  requirement  of  the  pertinent  for- 
mula. 

At  the  time  of  preparing  this  brief  the  govern- 
ment has  not  the  benefit  of  an  examination  of  the 
brief  of  appellants  which,  under  the  rules,  is  not 
required  to  be  filed  more  than  fifteen  days  before 
argument.  The  record  is  so  voluminous  that  it  is 
impossible  for  the  government  to  postpone  the 
preparation  and  printing  of  its  argument  to  the 
narrow  interval  between  the  times  fixed  by  the  rules 


19 

for  filing  the  respective  briefs  of  the  parties.  Ac- 
cordingly, what  the  reliance  of  appellants  will  be 
can  only  be  determined  at  this  time  by  a  considera- 
tion of  their  assignment  of  errors.  It  may  be  fairly 
assumed,  however,  that  this  court  will  not  be  asked 
to  disturb  the  lower  court's  findings  of  facts  in  the 
absence  of  a  showing  that  there  is  in  the  record  no 
substantial  basis  upon  which  to  predicate  such 
findings.  The  pertinent  rule  has  been  often  enunci- 
ated, but  never  more  clearly  nor  succinctly  than  by 
this  court  in  Foley  vs.  KiJhoiinie,  222  Fed.,  761, 
where  it  is  said: 

"It  is  the  established  rule  that  the  findings 
of  the  trial  court  in  a  suit  in  equity  must  be 
taken  as  presnmptivelij  correct  and  that,  unless 
an  obvious  error  has  intervened  in  the  applica- 
tion of  the  law  or  some  serious  or  important 
mistake  has  been  made  in  the  consideration  of 
the  cA'idence,  the  findings  will  not  be  disturbed 
by  the  appellate  court. 


ij 


The  foregoing  was  a  suit  to  set  aside  a  patent  ob- 
tained by  fraud. 

In  United  States  vs.  Marshall,  210  Fed.,  595,  597, 
in  the  eighth  circuit,  also  a  suit  to  set  aside  a  patent 
fraudulently  obtained,  the  emphasis  is  placed  upon 
the  necessity  that  error,  to  be  reversible,  must  be 
"manifest",  "obvious",  "palpable",  "serious";  but, 
in  the  last  analysis,  the  decisions  in  all  of  the  courts 
and  in  all  of  the  circuits  amount  to  the  same,  viz., 
that  the  findings  of  the  trial  court  are  "presumptive- 
ly correct"  and  will  not  be  disturbed  except  upon  a 
plain  showing  that  they  are  not  only  against  the 


20 

weight  of  the  evidence,  but  that  no  substantial  basis 
for  their  support  is  afforded  by  the  evidence. 

Harrison  vs.  Fete,  148  Fed.,  781 
Mastin  vs.  Noble,  157  Fed.,  506 
State  of  Iowa  vs.  Carr,  191  Fed.,  257 
Harper  vs.  Taylor,  193  Fed.,  944 
DeLaval  vs.  Iowa  Co.,  194  Fed.,  423 
Babcock  vs.  DeMott,  160  Fed.,  882. 

But  it  may  be  contended  that,  in  view  of  the  fact 
that  the  testimony  was  taken  in  the  instant  case  be- 
fore an  examiner,  no  presumptions  attend  the  find- 
ings of  the  trial  court  and  that  this  court  is  in  as 
favorable  position  to  pass  upon  the  credibility  of  the 
witnesses  and  glean  the  truth  in  the  midst  of  conflict 
as  the  lower  court;  and  The  Santa  Rita,  176  Fed., 
890,  and  United  States  vs.  Booth-Kelly  Lumber  Co., 
203  Fed.,  423,  429,  will  doubtless  be  cited  in  support. 
It  is  sufficient  to  say  that  in  the  former,  an  admiralty 
case,  the  holding  is  that,  when  the  evidence  of  the 
principal  witnesses  was  by  written  depositions,  the 
rule  that  "the  trial  court  is  better  able  to  reach  a 
satisfactory  conclusion  than  the  appellate  court 
*  *  *  does  not  apply  with  the  same  force.''  In 
the  Booth-Kelly  Lumber  Company  case  the  court 
indicates  that,  when  the  evidence  is  taken  before  an 
examiner  and  not  before  the  trial  judge,  the  latter 's 
findings  "are  not  attended  with  presumptions" 
which  attach  when  the  judge  "has  the  opportunity  to 
observe  the  demeanor  of  the  witnesses".  By  the 
language  quoted  it  is  submitted  that  Judge  Gilbert 
did  not  intend  to  say  that  under  such  circumstances 


21 

no  presumption  of  correctness  attends  the  findings 
of  the  trial  court;  for  in  such  case  the  lower  court 
would,  as  suggested  by  the  eighth  circuit  in  United 
States  vs.  Marshall,  210  Fed.,  595,  597,  be  no  more 
than  ''a  mere  conduit".  As  there  stated,  "the  ques- 
tion is  not  so  much  one  of  situation  to  decide  as  of 
where  the  law  places  the  primary  determination  of 
questions  of  fact.  While  no  doubt  the  circumstance 
that  the  district  judge  personally  heard  the  wit- 
nesses tends  to  strengthen  the  presumption  in  favor 
of  his  conclusion,  the  fact  that  he  did  not  hear  such 
witnesses,  but  that  the  proofs  before  him  were  en- 
tirely by  deposition  or  upon  examiner's  report,  does 
not  destroy  the  presumption.  Such  still  exists  in 
favor  of  his  conclusions.  To  hold  otherwise  would  be 
in  effect  to  make  this  a  court  of  first  instance.  The 
district  court  is  not  in  such  matters  a  mere  conduit. 
It,  not  this  court,  is  the  trial  court.  Our  func- 
tions are  simply  to  guard  against  manifest  error  on 
its  part  and  this  is  true  whether  such  arises  upon 
hearing  witnesses  or  upon  reading  a  record." 

Measured  solely  by  relative  situation,  the  appel- 
late court,  in  cases  in  which  the  evidence  is  taken 
by  an  examiner,  is  not  nearly  so  favorably  situated 
as  the  lower  court  for  the  reason  that  under  the 
new  rules  of  practice  in  equity  the  testimony  by 
questions  and  answ^ers  is  not  seen  by  the  appellate 
court,  but  only  a  condensed  statement  of  it  in  nar- 
rative form.  The  advantage  that  arises  out  of  read- 
ing the  questions  and  answers,  especially  of  the 
cross  examination,  is  obvious;  and  the  wisdom  of  a 


22 

rule,  the  effect  of  which  is  to  take  away  this  advan- 
tage, would  be  gravely  questionable  unless  the  find- 
ings of  the  trial  court  are  to  be  held  presumptively 
correct  and  are  not  to  be  disturbed  in  the  absence  of 
*' manifest",  "obvious",  "palpable"  error.  If  the 
trial  court  is  "a  mere  conduit"  through  which  to 
transmit  to  the  appellate  court  the  evidence  upon 
which  a  determination  shall  be  reached,  that  evi- 
dence ought  surely  to  be  sent  up  unimpaired  and  un- 
diminished so  that  the  court  may  have  all  the  bene- 
fits open  to  the  forwarding  agency.  But  the  gov- 
ernment does  not  understand  that  such  was  the  de- 
cision in  The  Santa  Rita  or  in  United  States  vs. 
Booth-Kelly,  supra,  the  effect  of  these  decisions  being 
merelv  to  indicate  that  in  the  one  case  the  pre- 
sumption  of  correctness,  while  still  obtaining,  is 
merely  not  as  strong  as  in  the  other. 

THE  ERRORS  ASSIGNED. 

Assignment  number  one  presents  this  question: 
Did  the  United  States  prior  to  patent  investigate 
and  ascertain  the  true  character  of  the  lands  in  suit 
— did  the  government  adjudicate  their  non-mineral 
character? 

Assignments  numbers  two  and  five  present,  in 
effect,  the  same  question,  viz. :  Had  the  United  States 
equal  knowledge  with  appellants  of  the  true  char- 
acter of  the  lands'? 

Assignments  numbers  three,  four,  six,  seven,  eight 
and  nine  present,  in  somewhat  varying  form,  two 
questions,  viz.: 


23 

1.  Were  the  lands  in  suit  at  the  time  of  the  pro- 
ceedings which  resulted  in  patent  knoivn  mineral 
lands?  ' 

2.  Did  the  railroad  company's  acting  land  agent 
falsely  and  fraudulently  represent  to  the  land  de- 
partment of  the  government  that  he  had  caused  the 
lands  in  suit  to  be  carefully  examined  as  to  their 
mineral  or  agricultural  character  and  that  they  were 
not  interdicted  mineral  lands,  but  non-mineral  agri- 
cultural land  of  the  character  contemplated  by  the 
grant  ? 

It  will  be  readily  seen  that  the  answer  to  the  sec- 
ond question  is  largely  dependent  upon  the  solution 
of  the  first;  for,  if  the  lands  were  known  mineral 
lands,  it  would  follow  that  the  affidavits  filed  by  ap- 
pellants were  false. 

Assignment  number  ten  presents  the  general  ques- 
tion of  the  validity  of  the  assailed  patent  and  its 
solution  depends  upon  the  answers  to  the  x>articular 
assignments. 

In  the  ensuing  argument  the  questions  so  pre- 
sented will  be  discussed  under  the  following  main 
divisions,  each  of  which  will  be  divided  into  such 
sub-topics  as  the  nature  and  details  of  the  evidence 
may  require: 

I.  The  government  did  not  prior  to  patent  investigate  and  ascer- 
tain the  true  character  of  the  lands  in  suit  and  did  not  determine  nor 
adjudicate  them  non-mineral  in  character. 

II.  The  government  had  not  prior  to  or  at  the  time  of  patent 
equal  knowledge  with  appellants  of  the  true  character  of  the  lands  in 


24 

suit   and   therefore    had   the   right   to    and   did   rely   on   their   verified 
proofs. 

III.  The  lands  in  suit  were,  at  the  time  of  the  proceedings  re- 
sulting in  patent,  known  mineral  lands. 

IV.  The  proofs  by  appellant  Southern  Pacific  Railroad  Company 
of  the  character  of  the  lands  in  suit  offered  in  connection  with  its  selec- 
tion thereof  were  false  and  were  fraudulently  made  and  were  cal- 
culated and  intended  to  and  did  deceive  the  land  officers  of  the  gov- 
ernment. 

I. 

THE  GOVERNMENT  DID  NOT  PRIOR  TO 
PATENT  INVESTIGATE  AND  ASCERTAIN  THE 
TRUE  CHARACTER  OF  THE  LANDS  IN  SUIT 
AND  DID  NOT  DETERMINE  NOR  ADJUDICATE 
THEM  NON-MINERAL  IN  CHARACTER. 

Upon  this  question  Judge  Bean's  opinion  lias  the 
following : 

"At  the  time  the  selection  list  was  first  filed 
the  lands  in  controversy,  together  with  a  large 
area  of  other  lands,  were  within  a  previous  with- 
drawal order  of  the  department  because  of  their 
probable  oil  content.  At  the  request  of  the  de- 
fendant company  the  department  ordered  an 
examination  of  the  lands  applied  for  by  a 
special  agent  to  ascertain  whether  they  should 
be  relieved  from  suspension  and  upon  his  re- 
port the  suspension  order  was  revoked  as  to 
these  lands  and  they  were  subsequently  patented 
to  the  defendant.  The  claim  is  made  that  the 
department,  in  issuing  the  patent,  relied  upon 
the  report  of  its  own  employees  as  to  the  char- 
acter of  the  land  and  not  upon  the  affidavit 
accompanying'  the  selection  list.  The  evidence 
shows  that  the  agent  making  the  examination 
and  report  was  not  an  oil  or  mineral  expert 
and  was  instructed  by  his  superior  in  the  Land 


25 

Office  that  'it  would  be  unnecessary  to  go  over 
all  the  lands,  but  to  drive  over  part  of  them  "as 
the  crow  flies"  and  to  interview  ranchmen, 
stockmen,  etc,  as  to  the  location  of  oil  wells  pro- 
ducing oil  in  paying  quantities'  and  to  'recom- 
mend that  those  lands  be  relieved  from  sus- 
pension on  which  he  found  no  oil  wells  pro- 
ducing oil  in  paying  quantities';  and  that  he 
acted  accordinsrlv  and  made  no  examination 
whereby  he  determined  or  could  determine 
whether  in  fact  the  lands  were  mineral  in  char- 
acter. In  his  report  he  said  that  he  'found  no 
oil  seepages,  oil  springs  or  other  indications  of 
oil  or  mineral  of  any  kind  that  would  tend  in 
his  opinion  to  warrant'  the  lands  being  classi- 
fied as  mineral  in  character  and,  therefore, 
recommended  that  they  he  relieved  from  sus- 
pension. 

''These  proceedings  were  in  no  sense  an 
adjudication,  hut  a  method  adopted  hy  the 
department  for  determining  whether  its  pre- 
vious order  of  withdraival  shoidd  he  revoked  and 
the  lands  opened  to  entry.  They  did  not  es- 
tablish the  non-mineral  character  of  the  lands 
nor  relieve  the  company  from  the  consequences 
of  suhmitting  false  and  misleading  affidavits 
and  proof  upon  tvhich  the  land  officers  ivere  ex- 
pected to  and  no  doubt  did  rely  in  issuing 
patents. 


>y 


The  foregoing  excerpt  shows  that  the  trial  court 
considered  the  very  question  now  raised  by  appel- 
lants and  found  against  them.  Unless,  then,  it 
plainly  appears  that  in  this  finding  there  was  mani- 
fest, palpable  error  and  that  there  is  no  substantial 
support  of  it  in  the  record,  under  the  rule  already 
discussed  it  Avill  not  be  disturbed  by  this  court. 
However,  the  government  is  far  from  being  com- 


26 

pelled  to  fall  back  upon  the  doctrine  of  "presump- 
tive correctness",  since  the  record  abundantly 
shows  that  the  finding  is  not  onl}^  amply  supported, 
but  that  it  was  inevitable  and  is  inescapable. 

A  proper  review  of  the  pertinent  facts  involves 
consideration  of  the  following: 

(a)  The  withdrawal  order  of  February  28, 
1900. 

(b)  Filing  and  rejection  of  selection  list  89. 

(c)  The  appeal  of  the  railroad  company 
from  the  order  of  rejection. 

(d)  The  railroad's  request  that  the  lands  in 
suit  be  relieved  from  suspension. 

(e)  The  instructions  to  special  agent  Ryan. 

(f)  S|)ecial  agent  Eyan's  qualifications,  in- 
vestigation and  reports. 

(g)  The  order  of  the  Commissioner  of  the 
General  Land  Office  relieving  the  lands  in  suit 
from  suspension. 

(h)     The  effect  of  the  foregoing  proceedings. 

a.     The  withdrawal  or  suspension  order  of  February  28,  1900. 

The  so-called  withdrawal  of  Februarv  28,  1900, 
was  a  telegraphic  order  from  Binger  Hermann,  then 
Commissioner  of  the  General  Land  Office,  to  the 
Register  and  Receiver  at  Visalia  to  "suspend  from 
disposition  until  further  order"  forty-five  entire 
townships  including  the  one  in  which  are  situated 
the  lands  in  suit  (Ex.  QQQ— R.  1524).  This  order 
was,  in  terms,  a  suspension  from  all  forms  of  acqui- 
sition. 


27 

E.  C.  Fiimej^  a  witness  for  the  government,  testi- 
fied as  to  the  circumstances  and  history  of  this  order 
of  suspension.  At  the  time  of  testifying  this  wit- 
ness was  an  assistant  attorney  general  in  the  In- 
terior Department;  he  had  served  eleven  3''ears  as  a 
clerk  and  examiner  in  the  mineral  division  of  the 
General  Land  Office,  that  division  being  known  as 
division  "N"  and  its  correspondence  exclusive!}^ 
bearing  the  letter  "N";  for  the  three  next  succeed- 
ing years  he  had  served  as  a  member  of  the  board 
of  law  review,  reviewing  letters  and  decisions  pre- 
pared for  the  signature  of  the  Commissioner ;  served 
during  the  year  1909  as  assistant  to  the  Secretary  of 
the  Interior;  thence  and  until  May,  1911,  he  was 
.chief  law^  officer  of  the  reclamation  service;  Novem- 
ber 1,  1911,  he  became  an  assistant  attorney  general 
in  the  Interior  Department;  during  his  long  service 
he  had  become  very  familiar  with  the  practice  of 
the  land  department  (R.  1581-2).  With  reference  to 
Exhibit  QQQ,  the  suspension  order  now  under  con- 
sideration, Mr.  Finney  stated  that  the  effect  given  it 
in  the  General  Land  Office  was  that  it  ivas  a  suspen- 
sion from  all  forms  of  acquisition,  both  mineral  and 
non-mineral  (R.  1582).  It  was  issued  in  response  to 
representations  made  to  the  General  Land  Office  dur- 
ing 1899  and  1900  that,  unless  large  areas  in  Cali- 
fornia were  suspended  from  entry,  agricultural  pat- 
ents would  be  obtained  thereto  before  opportunity 
was  afforded  for  ascertaining  whether  or  not  they 
contained  oil  (R.  1581-2).  That  this  order  was  in 
force  when  selection  list  89  w^as  first  filed  is  not  dis- 
puted. 


28 

b.     Filing  and  rejection  of  selection  List  89. 

C.  W.  Eberlein  at  the  instance  of  E.  H.  Harriman, 
then  president  of  the  Southern  Pacific  Company  and 
the  Southern  Pacific  Eailroad  Company,  came  to 
San  Francisco  in  June,  1903,  to  take  up  the  matter 
of  consolidating  and  reorganizing  certain  land  grants 
in  which  appellants  were  interested  (R.  1037).  After 
his  arrival  Mr.  Julius  Kruttschnitt,  vice-president 
and  general  manager  of  the  Southern  Pacific  Com- 
pany, asked  and  insisted  that  he  accept  the  position 
of  acting  land  agent  of  the  Southern  Pacific  Railroad 
Company.  He  did  so  and  entered  upon  the  dis- 
charge of  the  duties  of  that  office  August  3,  1903  (R. 
1037),  which  involved  "full  charge  and  control  of 
all  the  granted  lands  of  the  compan}^"  (R.  1039-40). 

November  14,  1903,  Eberlein  filed  in  the  land  office 
at  Visalia  the  original  selection  list  number  89,  desig- 
nated here  as  "original"  for  the  reason  that  two 
lists  were  filed  before  patent  and  bore  the  same  num- 
ber, 89  (Ex.  12-M).  This  so-called  list  is  labeled 
"Lands  selected  by  the  Southern  Pacific  Railroad 
Company,  Indemnity  Limits,  Main  Line,"  and  is 
dated  November  7,  1903.  It  was  accompanied  by 
the  non-mineral  affidavits  set  out  in  full  on  page  3 
of  this  brief. 

November  18,  1903,  this  selection  list  was  rejected 
by  the  Register  and  Receiver  on  the  ground  that  the 
lands  applied  for  were  embraced  in  the  Commission- 
er's order  of  suspension  of  February  28,  1900  (R. 
3756-7).     That  this  action  was  in  conformity  with 


29 

the  rules  of  the  department  in  like  cases  apx)ears  and 
is  stated  and  admitted  by  the  Washington  attorney 
of  appellants,  D.  A,  Chambers,  in  a  letter  from  him 
December  16,  1903,  to  W.  F.  Herrin,  general  counsel 
of  the  Southern  Pacific  Company  and  Southern  Pa- 
cific Bailroad  Company  (R.  1483-4.)  That  a  patent 
would  not  issue  in  the  face  of  the  outstanding  sus- 
pension was  known  to  the  railroad,  as  is  shown  by 
the  letter- of  December  9,  1903,  from  W.  F.  Herrin, 
general  counsel,  to  Eberlein,  the  acting  land  agent, 
which  is  quoted  by  Eberlein  in  his  letter  of  December 
10,  1903,  to  Chambers  (R.  1577).  In  it  Herrin  is 
quoted  as  saying:  "The  best  course,  it  seems  to  me, 
was  to  accompany  the  selection  list  with  affidavits 
setting  forth  that  the  lands  are  vacant  and  unappro- 
priated non-mineral  lands  and  asking  that  the  order 
of  suspension  he  released"  (R.  1578). 

c.  Appeal  of  the  railroad  from  the  order  of  rejection. 

From  the  rejection  of  list  89  the  railroad  appealed 
December  11,  1903,  to  the  Commissioner  of  the  Gen- 
eral Land  Office  and  the  appeal,  together  with  the 
papers  in  the  case,  was  forwarded  the  same  day  to 
Washington  by  Geo.  W.  Stewart,  the  Register  (Ex. 
12-N-R.  3767). 

d.  The  railroad's  request  that  the  lands  be  relieved  from  suspension. 

As  already  noted,  an  appeal  was  taken  from  the 
order  of  rejection  and  was  forwarded  to  Washington 
December  11,  1903.     This  appeal  was  taken  by  the 


Q 


0 


law  dej)artment  of  the  railroad  b}^  W,  F.  Herrin, 
general  counsel  of  the  Southern  Pacific  Company 
and  Southern  Pacific  Railroad  Company,  and  not  by 
the  land  department  or  Eberlein,  the  acting  land 
agent  (R.  1577-8).  It  would  seem  that  the  papers 
were  prepared  by  Wm.  Singer,  an  eminent  attoruej^ 
connected  with  the  railroad  company.  The  specific 
purpose  of  this  appeal  does  not  appear  nor  does  it 
appear  that  it  ever  came  on  for  hearing  before  the 
Commissioner.  Such  action  as  was  taken  with  refer- 
ence to  it  Avill  be  discussed  later. 

A  copy  of  the  appeal  was  sent  by  Herrin  to  Cham- 
bers, the  Washington  attorney,  December  9,  1903, 
two  days  before  the  appeal  w^as  filed  in  the  local  land 
office  at  Visalia  (R.  1577).  Replying  December  16, 
1903,  to  the  letter  enclosing  such  copy.  Chambers 
called  the  attention  of  Herrin  to  the  fact  that  an 
effort  had  been  previously  made  to  have  the  late 
Commissioner  of  the  General  Land  Office,  Dinger 
Hermann,  revoke  the  outstanding  suspension  order 
of  February  28, 1900,  but  that  "the  best  he  would  do 
was  to  direct  his  special  agents  to  examine  and  report 
on  all  lands  within  railroad  limits  in  southern  Cali- 
fornia" (R.  1483). 

Prior  to  the  filing  and  forwarding  of  the  appeal, 
viz.,  November  30,  1903,  Chambers  had  addressed  a 
letter  to  the  Commissioner  in  which,  referring  to  list 
89  and  the  lands  described  in  it,  he  called  attention  to 
the  fact  that  the  lands  had  been  suspended  February 
28, 1900,  but  that  "an  examination  of  the  tract  books 


31 

in  your  office  fails  to  sliow  the  entry  of  a  single  acre 
of  these  lands  under  the  act  allowing  entry  of  lands 
valuable  for  oil";  and  further  writing  as  follows: 

^'Upon  my  request  of  October  7,  1903,  your 
office  wrote  me  October  23d  (Quasi  contest  1997 
and  1998)  'that  an  investigation'  of  other  lands 
described  (among  them  the  SW14  Sec.  1  of  said 
T.  30  S.,  K.  23  E.)  'will  be  made  by  an  agent  of 
the  office  and  upon  receipt  of  his  report  appro- 
priate action  will  be  taken  upon  the  application 
of  the  company  to  select  same '.  I,  therefore,  re- 
spectfully ask  that  a  special  agent  be  instructed 
to  at  once  examine  said  lands  and  report  thereon 
to  your  office"  (Ex.  VYA^— R.  1545). 

On  the  7th  day  of  October,  1903,  Chambers  had 
made  similar  representations  concerning  other  lands 
which  the  railroad  company  was  attempting  to  select 
and  which  were  in  the  suspended  area  and  had  asked 
that  a  special  agent  be  instructed  to  report  on  them ; 
so  that  the  suggestion  of  a  report  by  a  special  agent 
originated  witli  Chambers  and  not  ivith  the  Commis- 
sioner (Ex.  SSS:  R.  1539-40). 

When  these  letters  were  received  in  the  General 
Land  Office  they  were  referred  to  the  witness  Finney 
who  testified  that^  upon  receipt  of  them,  particularly 
that  of  November  30,  1903,  having  prepared  for  the 
signature  of  the  Commissioner  a  reply  to  that  of 
October  7th,  he  w^ent  to  the  Chief  of  Division  P,  in 
charge  of  the  field  force,  and  "asked  for  the  name 
and  address  of  a  special  agent  to  make  a  field  investi- 
gation of  the  lands  included  in  the  order  of  suspen- 
sion in  California  with  a  view  to  obtaining  inf orma- 


32 

tion  upon  wliicli  the  General  Land  Office  might 
determine  the  advisability  of  either  coyit inning  or 
revoking  the  siispensioyi  order" ;  the  only  intention 
at  that  time  deing  to  determine  whether  the  suspen- 
sion shoidd  he  lifted  or  not;  "it  was  my  purpose,  if 
the  special  report  so  warranted,  to  prepare  for  the 
approval  of  the  Commissioner  a  letter  restoring  the 
lands  to  general  and  appropriate  disposition  and 
entry,  selection  and  filing  under  the  law  applicable 
to  them;  if  the  report  showed  good  reason  for  con- 
tinuing the  suspension  orcler^  it  was  my  purpose  to 
prepare  letters  denying  the  request  of  the  attorney 
for  the  railroad  company  and  advising  the  Register 
and  Receiver  that  the  suspension  would  be  con- 
tinued" (R.  1582-3). 

December  16,  1903,  in  a  letter  to  W.  F.  Herrin, 
general  counsel  of  the  Southern  Pacific  Company 
and  Southern  Pacific  Railroad  Compan}^,  D.  A. 
Chambers,  the  Washington  attorney,  referring  to 
the  suspension  of  February  28,  1900,  wrote  that  the 
rejection  by  the  Register  and  Receiver  of  list  89  was 
in  conformity  with  the  rulings  of  the  Department  in 
like  cases.  He  further  wrote  that  he  had  endeavored 
to  secure  from  Commissioner  Dinger  Hemiann  the 
revocation  of  the  order  of  suspension,  but  that  "the 
best  he  would  do  was  to  direct  his  special  agents  to 
examine  and  report  on  all  lands  within  railroad 
limits  in  southern  California."  He  further  stated 
that  he  had  never  been  able  to  learn  that  any  report 
was  ever  made  by  special  agents.  With  specific 
reference  to  list  89  he  wrote:    "As  to  the  lands  in 


33 

this  list  89,  on  the  30th  ult.  I  requested  the  Com- 
missioner to  have  an  investigation  of  them  made 
immediately  by  a  special  agent  and  on  the  10th  inst. 
he  advised  me  that  a  special  agent  had  been  in- 
structed to  examine  and  report  on  them. ' '  It  did  not 
seen  advisahle  to  him  '^to  take  steps  to  get  a  hearing" 
(E.  1483). 

December  10,  1903,  Chambers  wrote  Eberlein  that 
he  had  requested  the  Commissioner  to  "have  an 
investigation  made  by  a  special  agent  of  his  office 
without  delay  of  the  lands  named  in  the  application 
list";  and  further:  "I  am  now  advised  by  this  letter 
of  the  tenth  instant  that  he  has  directed  such  ex- 
amination to  be  made.  I  presume  that  the  special 
agent  is  Mr.  Ryan,  but  I  am  not  advised  positively 
about  this."    (R.  1482.) 

January  13,  1904,  Chambers  wrote  Eberlein  a  let- 
ter in  which  he  states  with  reference  to  his  action  in 
ordering  that  a   report  be  made   on  the   lands  in 

list  89: 

"But  inasmuch  as  patent  cannot  issue  until 
the  Commissioner  relieves  them  of  suspension, 
it  seems  to  me  that  what  has  been  done  here  will 
hasten  the  adjudication  of  the  lands  as  non- 
mineral  and  their  patenting  to  the  company. 
That  was  my  object."    (R.  1486,  1488.) 

In  the  same  letter  Chambers  writes  that  he  has 
been  confidentially  allowed  to  read  the  Commis- 
sioner's letter  of  December  10,  1903,  to  Special 
Agent  Ryan  and  that  it  "suggests  that  he  now  report 


34 

whether  there  is  aiw  necessity  for  the  continuance 
of  the  suspension  of  any  of  the  lands  in  three  dis- 
tricts." (R.  1488.) 

e.     Instructions  to  Special  Agent  Ryan. 

Exhibit  WWW  (R.  1547-8)  is  the  Acting  Com- 
missioner's letter  of  instructions  to  special  agent 
Eyan.  Because  of  its  importance  it  is  here  set  out 
in  full  and  follows : 

DEPART^^IEXT  OF  THE  INTERIOR 

General  Land  Office 

N.  Washington,  D.  C.       H.  G.  P. 

E.  C.  F.  December  10,  1903. 

Address  only  the  Commissioner 
of  the  General  Land  Office. 
Mr.  E.  C.  Ryan, 

Special  Agent,  General  Land  Office, 
Los  Angeles,  California. 
Sir: 

By  letter  of  this  office  dated  October  23,  1903, 
in  case  of  ex  parte  Southern  Pacific  Railroad 
Company,  Quasi-Contest  1997  and  1998,  you 
were  directed  to  proceed  to  and  examine  the 
SE14  Sec.  23;  SWi/4  Sec.  27;  T.  32  S.,  R.  25  E.; 
and  the  SW14  Sec.  1,  T.  30  S.,  R.  23  E.,  said 
tracts  having  been  applied  for  by  the  railroad 
company  and  to  submit  report  to  this  office 
stating  whether  or  not  in  your  opinion  same 
should  be  relieved  from  the  suspension  placed 
thereon  bv  telegrams  "P"  of  February  21st  and 
28th,  1900. 

The  Southern  Pacific  Railroad  Company  has 
now  recpiested  that  the  following  lands  be  also 
examined  in  order  that  same  may  he  relieved 
from  suspension  and  made  subject  to  selection 
by  the   company,  being  within   the   indemnity 


35 

limits  of  its  grant,  if  such  examination  dis- 
closes that  same  are  agricultural  in  character. 
It  is  stated  that  nearly  four  years  have  elapsed 
since  the  order  of  suspension  and  that  no 
mineral  entries  have  been  made  for  any  of  said 
lands.  The  lands  referred  to  are  described  as 
follows:  All  of  section  15;  NE14  and  BWV^ 
Sec.  17;  NE14  and  SWy,  Sec.  19;  all  of  sections 
21;  23;  25;  27.-  29;  33,  and  35,  T.  30  S.,  E.  23., 
M.  D.  M. 

You  are  accordingly  directed,  when  you  make 
examination  of  the  lands  first  described,  to 
also  examine  the  tracts  just  enumerated  and  to 
promptly  thereafter  submit  report  as  to  whether 
or  not  in  your  opinion  scone  should  he  relieved 
from  suspension. 

This  office  has  no  available  force  from  which 
to  assign  you  assistance  at  the  present  time. 
With  this  condition  of  affairs  in  view,  you  will 
make  report  based  upon  the  examinations  here- 
tofore made,  your  knowledge  of  the  lands  re- 
maining to  be  examined,  and  familiarity  with 
the  country  generally,  as  to  whether  in  your 
opinion  there  is  any  necessity  for  the  continu- 
ance of  the  suspension  of  the  lands  in  the 
Visalia,  San  Francisco  and  Los  Angeles  land 
districts  suspended  by  this  office  in  1900,  and  not 
reported  upon,  a  list  of  which  you  have. 

Very  respectfully, 

J.  H.  FlMPLE^ 

WPW  7  Acting  Commissioner. 

(R.  1547-8.) 


The  ''letter  of  this  office  dated  October  23,  1903," 
referred  to  in  the  foregoing  reads  as  follows  (Ex. 
UUU;  R.  1542-3): 


36 

N.  Departmext  of  the  Ixteeioe,      hoc 

ECF  General  Land  Office  HOP 

Address  only  tlie  Commissioner 
of  the  General  Land  Office. 

Washington,  D.  C. 

October    23,    1903. 

Southern  Pacific  P.  P.  Co., 
Ex  parte. 

Quasi  contests  1997  &  1998. 

Mr.  E.  C.  Pyan, 

Special  Agent,  General  Land  Office, 
Los  Angeles,  California. 

Dear  Sir: 

The  Southern  Pacific  Pailroad  Company  has 
filed  application  in  the  Visalia  land  office  to  se- 
lect the  SE14  See.  23,  the  SW14  Sec.  25  and  the 
SW14  Sec.  27,  T.  32  S.,  P.  25  E.,  M.  D.  M.,  and 
the  SW14  Sec.  1,  T,  30  S.,  P.  23  E.,  M.  D.  M. 
The  lands  in  the  above  named  townships  were 
suspended  from  disx30sition  under  the  agricul- 
tural land  laws  on  account  of  their  alleged  min- 
eral (oil)  character  bv  telegrams  "P"  of  Feb- 
ruary 21st  and  28,  1900.  It  is  alleged  by  the 
railroad  company  that  the  tracts  above  described 
are  in  fact  non-mineral  in  character.  You  are 
therefore  directed,  in  the  regular  order  of  busi- 
ness, to  proceed  to  and  examine  the  lands  in 
question  and  thereafter  suhmit  report  to  this 
office  stating  whether  or  not  in  your  opinion  the 
same  should  he  relieved  from  suspension.  When 
making  report  please  refer  to  Quasi  contests 
1997  and  1998. 

Very  respectfully, 

J.  H.  FnrpLE, 
WPW  7  Assistant  Commissioner. 

It  will  be  observed  that  these  letters  were  written 
December  10,  1903,  and  October  23,  1903,  respect- 


37 

ively,  aucl  therefore  before  tlie  receipt  in  Washington 
of  the  appeal  which,  as  heretofore  noted,  was  filed 
at  Visalia  December  9th  and  forwarded  the  same 
day  to  the  General  Land  Office. 

That  the  railroad's  effort  and  request  were  to 
have  the  lands  ''relieved  from  the  suspension  placed 
tJiereon  by  telegram  'P'  of  February  21  and  28, 
1900",  and  that  By  an  tvas  directed  to  "  sutmit  report 
as  to  tvlietlier  or  not  in  your  opinion  same  should  he 
relieved  from  suspension"  are  the  pertinent  pro- 
visions of  his  instructions.  This  ivas  the  end  and 
purpose  in  view — what  u-as  sought  hy  the  railroad 
and  ordered  hy  the  Commissioner. 

The  manner  and  method  to  be  employed  and  fol- 
lowed are  set  out  plainly  in  the  last  paragraj)h  of 
this  letter  and  demonstrate  the  singleness  of  purpose 
and  object  already  shown. 

The  foregoing  letters  constitute  the  written  in- 
structions to  Eyan.  He  also  had  verbal  instructions 
which  were  given  by  one  Pollock,  who  was  then 
chief  of  the  field  service.  Ryan  testified  as  a  witness 
for  the  government  (R.  1598)  and  stated  in  detail 
these  verbal  instructions  which  he  said  w^ere  given 
him  about  the  last  of  September,  1903,  prior  to  his 
written  instructions.  Pollock  told  him  that  the  lands 
in  suit  and  other  lands  upon  which  he  was  directed 
to  report  had  been  suspended  about  four  years  and, 
in  answer  to  the  protest  of  the  witness  that  it  would 
be  impossible  for  him  to  go  over  all  of  the  lands 
without  a  camp  outfit,  stated  that  he  could  not  fur- 


38 

nish  him  with  the  outfit,  htd  that  it  was  not  necessary 
for  the  witness  to  go  over  all  the  lands;  that  he  could 
drive  over  part  of  them  ''just  as  the  croiv  flies"  and 
interview  ranchmen  and  stockmen  as  to  the  location 
of  oil  ivells  producing  oil  in  paying  quantities.  Pol- 
lock til  en  instructed  Ryan  to  recommend  that  lands 
on  which  he  did  not  find  wells  producing  oil  in  pay- 
ing quantities  he  relieved  from  suspension  (R. 
1597-8).  His  instructions  tvere  to  examine  all  of  the 
lands  under  suspension  which  included  about  tiventy- 
five  townships  (E.  1598). 

Ryan  had  no  instructions,  either  oral  or  written, 
to  determine  speeificalh'  the  mineral  or  non-mineral 
character  of  the  lands  upon  which  he  was  directed 
to  report  (R.  1601).  He  understood  definitely  from 
Pollock  that  the  only  thing  on  tvhich  he  was  to  report 
was  'Whether  or  not  he  found  oil  in  paying  quantities 
and  stated  that  that  was  all  he  was  looking  for  (R. 
1606). 

E.  C.  Finney,  an  assistant  attorney  general  in  the 
Interior  Department,  who  in  one  capacity  or  another 
had  been  (connected  with  that  department  more  than 
fifteen  years,  testified  that  prior  to  the  request  by 
the  railroad  for  a  report  on  those  lands  there  was  a 
feeling  in  the  department  that  many  of  these  lands 
which  had  been  under  suspension  for  some  time 
should  be  relieved  unless  there  was  real  showing  in 
the  way  of  exploration;  that  he  himself  had  noted 
several  instances  of  the  rejection  by  the  Register  and 
Receiver  of  railroad  selections  and  applications  for 


H9 

homestead  entries  and  tbought  that,  if  the  agents' 
reports  showed  no  good  reason  to  the  contrary,  the 
lands  should  be  restored  to  general  disposition  (R, 
1591).    He  also  stated  that  the  order  of  suspension 
of  February  28,  1900,  covered  all  forms  of  disposi- 
tion and  that,  during  its  pendency,  no  entry  or  selec- 
tion could  he  allowed  (E.  1591).    Accordingly,  it  was 
the  purpose  of  the  witness,  in  preparing  the  letter 
of  instructions  to  Eyan,  and  of  the  Commissioner, 
in  approving  and  signing  it,  to  obtain  general  infor- 
mation derived  from  a  general  examination  of  the 
lands  and  from  whatever  knowledge  Eyan  might  be 
able  to  acquire  or  had  already  acquired  (E.  1586). 
The  Commissioner's  purpose  was  to  acquire  general 
information  to  guide  him  in  restoring  the  lands  to 
general  disposition  so  that  desert  lands  claimants, 
forest  lieu  selectors,  mineral  claimants  or  any  other 
qualified  citizens  might  apply  to  select  or  enter  the 
lands  under  the  applicable  laws  upon  submitting  the 
proofs  of  the  character  required  by  the  law  and 
regulations ;  that  there  was  no  attempt  to  adjudicate 
the  character  of  any  particular  tract  of  land  in  any 
of  the  letters  which  he  prepared  or  with  which  he 
had  to  deal;  that  consequently  there  was  no  effort 
to  send  a  person  with  special  scientific  qualifications 
to  determine  the  character  of  the  lands;  and,  in  fine, 
that  the  revocation  of  a  suspension  teas  regarded  and 
treated  as  a  mere  restoration  of  the  lands  to  their 
former  status.  (E.  1587). 

Finney  was  the  official  to  whom  was  referred  for 
appropriate  action  the  letter  of  November  30,  1903, 


40 

of  Chambers,  the  Washington  attorney  of  the 
Southern  Pacific  Eailroad  Company  (Ex.  VVV — 
R.  1544-5),  to  tlie  Commissioner  asking  that  "a  spe- 
cial agent  be  instructed  to  at  once  examine  said  lands 
and  report  thereon  to  your  of&ce."  He  testified  that, 
when,  as  already  set  out,  he  sought  the  name  and 
address  of  a  special  agent  to  make  a  full  inyesti- 
gation  of  the  lands  included  in  the  order  of  sus- 
pension, he  did  so  with  a  yiew  of  obtaining  infor- 
mation upon  which  the  General  Land  Office  might 
determine  the  adyisability  of  either  continuing  or  re- 
yoking  the  orders  in  question. 

The  letter  of  instructions  of  December  10,  1903, 
from  the  Acting  Commissioner  to  Ryan  (Ex.  WWW 
— R.  1547)  was  prepared  by  Finney  and  bears  his 
initials— "E.  C.  F."  (R.  1586.)  It  is  for  this  reason 
that  so  much  of  the  testimony  of  this  witness  has 
been  set  out,  bearing,  as  it  does,  directly  upon  the 
question  of  the  written  instructions  by  which  Ryan 
was  goyerned. 

f.     Special  agent  Ryan's  ctualifications,  investigations  and  report. 

1.    His  qualifications : 

Ryan  was  a  special  agent  of  the  General  Land 
Office  stationed  at  Los  Angeles.  He  was  neither  a 
geologist  nor  mineralogist  (R.  1597)  and  himself 
testified  that  he  woidd  not  have  known  a  gas  hloiv- 
out  if  he  had  seen  it  (R.  1605).  He  had  gone  to 
Los  Angeles  in  October,  1899.  He  first  went  into 
the  oil  fields  at  Bakersfield  probably  in  1900  or  1901. 
Afterwards  he  was  at  McKittrick  for  a  while,  "pass- 


41 

ing  in  and  out."  He  was  there  probably  twice  or 
oftener  in  1903  "to  look  over  the  suspended  lands." 
(R.  1601.) 

The  foregoing  is  the  "short  and  simple  annals" 
of  the  special  agent's  qualifications  as  disclosed  by 
the  record  and  as  brought  out  both  on  direct  and 
cross-examinations.  It  is  manifest  that  there  can  be 
predicated  upon  them  no  special  fitness  to  pass  upon 
the  difficult  problem  of  determining  the  mineral 
character  of  land  and  that  the  land  department  of 
the  government,  in  sending  him  into  the  oil  fields, 
did  not  expect  to  be  informed  by  him  as  to  whether 
the  lands  upon  which  he  was  to  report  were  actually 
oil  lands  or  chiefly  valuable  for  agriculture.  Indeed, 
there  is  direct  testimony  that  "there  was  no  attempt 
to  send  a  person  with  special  qualifications  to 
determine  the  character  of  the  lands."  (Finney — 
R.  1587.) 

2.     His  investigation: 

Only  two  witnesses  testified  as  to  w^hat  Ej^an  actu- 
ally did — he  himself  and  D.  W.  Maddux,  a  witness 
for  appellants,  who  drove  the  team  in  which  Ryan 
made  his  trips  of  invcvstigation  of  the  presence  of 
"oil  wells  producing  oil  in  paying  quantities." 

From  Ryan's  testimony  the  following  appears: 

The  examination  was  begun  in  January,  1904. 
Ryan  and  Maddux  made  McKittrick  headquarters 
and  Ryan  was  engaged  about  three  days  in  the  ex- 
amination of  the  EUi  Hills  (R.  1602).    He  first  went 


42 

to  a  point  where  he  could  look  over  the  lands  and 
looked  around  for  oil .  wells,  but  did  not  see  any. 
(It  will  not  be  disputed  that,  while  an  oil  well  itself 
cannot  be  seen  afar,  the  derrick  with  which  every 
producing  oil  well  in  California  is  crowned  is  of 
commanding  height  and  size  and,  when  there  is  no 
obstruction,  can  be  seen  for  miles.)  He  did  not  go 
over  everv  section  of  land — only  four  or  five  of 
them  (E.  1598),  The  land  was  very  rough  and  it 
was  physicallv  impossible  for  him  to  get  over  all 
of  it.  He  did  not  examine  the  land  with  reference 
to  oil  seepages  or  oil  sands.  He  looked  for  them 
along  the  road  which  he  followed,  but  found  none. 
There  might  have  been  some  on  the  lands  at  places 
which  he  did  not  see;  but  he  was  not  instructed  to 
go  over  every  legal  subdivision  (R.  1599).  He 
probably  got  over  half  of  the  townships  in  the 
twenty-five  upon  which  he  reported  and  interviewed 
people  relative  to  the  oil  wells  that  might  be  there 
(R.  1599).  According  to  instructions  he  interviewed 
stockmen,  cattlemen  and  anyone  whom  he  chanced 
to  meet  along  the  line  as  to  both  the  lands  which  he^ 
traversed  and  those  upon  which  he  did  not  go 
(R.  1600-1).  His  exammation  was  made  for  tlie 
purpose  of  ascertaining  if  there  were  oil  wells  and, 
finding  none,  he  reported  according  to  instructions 
(R.  1603).  He  did  not  go  upon  much  of  the  land  in 
the  Elk  Hills;  but,  finally  coming  to  the  command- 
ing eminence  already  mentioned,  he  could  see  no 
development.  He  made  no  inquiries  concerning  the 
Elk  Hills,  though  Maddux  may  have  told  him  some- 
thing about  them  (R.  1604).     (It  will  not  be  dis- 


43 

puted  that  at  the  time  in  question  there  was  no 
development  in  the  Elk  Hills.)  He  made  no  ex- 
tensive examination  of  the  lands  and  did  not  go  on 
much  of  it — just  looked  along  the  road,  ''his  cri- 
terion being  oil  in  paying  quantities"  (R.  1605). 

From  Maddux'  testimony  the  following  apepars: 

The  witness  accompanied  Eyan  as  a  sort  of  pilot 
and  his  recollection  was  that  thev  were  in  the  Elk 
Hills  three  or  four  days  (R.  1972).  Ryan  did  not 
tell  him  that  he  was  looking  for  oil  derricks  and  the 
onlv  information  that  he  gave  was  that  his  business 
was  to  inspect  the  odd-numbered  or  railroad  sections. 
Witness  observed  no  mining  work  in  progress  in  the 
Elk  Hills  (R.  1973).  but  saw  many  location  notices. 

If  there  is  anv  real  conflict  in  the  testimonv  of 
these  witnesses  as  to  the  number  of  days  spent  in 
the  Elk  Hills,  it  is  clearly  resolved  in  favor  of  the 
statement  of  Rvan  in  his  letter  of  Januarv  22,  1904, 
in  which,  reporting  to  the  Commissioner,  he  states 
that  his  examination  covered  five  days,  Januarv  10, 
11,  12,  13  and  14.  Maddux  himself  on  cross-ex- 
amination admitted  that,  if  the  entire  exami- 
nation covered  but  five  davs,  onlv  two  of  them 
were  spent  in  the  Elk  Hills  (R.  1972-3),  two  days 
being  consumed  in  joux^ne^dng  to  and  from  Mari- 
copa. Manifestly,  Ryan's  memory  of  the  period  of 
the  examination  during  the  very  month  in  which  it 
was  made  was  more  reliable  than  Maddux'  could 
possibly  have  been  eight  years  afterwards ;  and  there 
is  no  suggestion  that  Ryan  at  the  time  of  making 


44 

his  report  had  reason  to  understate  the  duration  of 
his  work. 

3.     His  report: 

January  22,  1904,  special  agent  Ryan  transmitted 
a  written  report  to  the  Commissioner  of  the  General 
Land  Office  concerning  the  lands  described  in  the 
letters  of  the  Acting  Commissioner  already  set  out. 
That  report  is  Exhibit  XXX  (R.  1550)  and  follows: 

88085 
Department  of  the  Ixterior 
General  Land  Office 

Los  Angeles,  Cal.,  January  22,  1904. 

Hon.  Commissioner, 
General  Land  Office, 
Washington,  D.  C. 

Sir: 

By  your  letter  ("N"  E.  C.  F.)  of  October  23, 
1903,  in  case  of  ex  parte  Southern  Pacific  Rail- 
road Company,  Quasi  contests  1997  and  1998, 
I  was  directed  to  proceed  to  and  examine  the 
SE14  Sec.  23;  SWi/i  Sec.  25;  SWy4  Sec.  27, 
Township  32  South,  Rani^e  25  E.,  M.  D.  M.,  and 
the  SWi/i.  Section  1,  Township  30  S.,  Range 
23  E.,  M.  D.  M.,  said  tracts  having  been  applied 
for  by  the  railroad  company,  and  to  submit  re- 
port stating  whether  or  not  in  my  opinion  same 
should  be  relieved  from  the  suspension  placed 
thereon  by  telegrams  "P"  of  February  21st  and 
28,  1900. 

By  your  letter  ("N"  E.  C.  F.)  of  December 
10,  1903,  I  was  directed  to  also  examine  Section 
15;  NEi/,  and  Sl/>  Section  17;  NE1/l  and  Si/> 
Section  19;  Sections  21,  23,  25,  27,  29,  33  and 
35,  Township  30  S.,  Range  23  E.,  M.  D.  M.,  and 
to  submit  report  as  to  whether  or  not  in  my 


45 

opinion  said  lands  should  be  relieved  from  sus- 
pension. 

I  have  the  honor  to  report  that  on  January 
10th,  11th,  12th,  13th  and  14th,  1904,  I  made  a 
careful  examination  of  the  lands  in  question  and 
found  no  oil  seepages,  oil  springs,  surface  or 
other  indications  of  oil  or  minerals  of  any  kind 
that  would  tend,  in  my  opinion,  to  warrant  said 
lands  being  classed  as  mineral  in  character,  and 
I  respectfully  recommend  that  they  he  relieved 
from  suspension. 

Very  respectfully, 

E.  C.  Eyan, 
Special  Agent,  General  Land  Office. 
(R.1549-50-51.) 

It  is  to  be  noted  that  this  report  concludes  with 
a  recommendation  in  exact  accord  wdth  the  request 
of  the  railroad  and  the  instructions  of  the  Acting 
Commissioner.  The  request  of  Chambers  had  been 
that  the  lands  be  ''relieved  of  suspension/'  The  in- 
structions of  the  Acting  Commissioner  had  been 
that  Rvan  recommend  w^hether  or  not  thev  should  be 
"relieved  from  suspension/'  Now  comes  the  report 
recommending  that  they  be  relieved  from  suspension. 

The  report  already  set  out  covers  the  lands  in  suit 
and  a  quarter  section  in  each  of  Sections  23,  25  and 
27  of  T.  32  S.,  R.  25  E.,  distant  therefrom  ten  or 
twelve  miles. 

In  a  general  report  made  March  22,  1904,  Ryan 
included  these  lands  in  suit  along  with  twenty-four 
other  townships  covered  by  the  outstanding  order  of 
suspension.    This  report  is  Exhibit  4-B  and  is  found 


46 

at  pages  1559-1567  of  the  record.  In  this  report  he 
says  with  reference  to  the  township  in  which  the 
lands  in  suit  lie: 

"No  wells  have  been  bored  for  oil  and  in  my 
opinion  all  the  lands  in  this  township  should  be 
relieved  from  further  suspension."  (R.  1564.) 

Thus  it  is  seen  that  he  was  following  the  "cri- 
terion" wdiich  he  says  was  prescribed  by  his  chief, 
Pollock. 

As  corroborative  of  his  testimony  concerning  this 
matter  of  "criterion" — that  is,  that  he  should  rec- 
ommend relief  from  suspension  where  he  found  no 
"oil  wells  producing  oil  in  paying  quantities" — 
and  of  his  faithfulness  in  observing  it,  this  gen- 
eral report  shows  that  m  several  instances  in  which 
he  found  wells  ivhich  had  yielded  oil  he  recom- 
mended that  the  lands  he  relieved  from  further  sus- 
pension. The  report  demonstrates  that  he  was 
literally  governed  in  his  recommendations  by  the 
instructions  that  his  ''criterion''  shotdd  he  the  pres- 
ence or  absence  of  oil  wells  actually  producing  oil 
in  commercial  quantities.  With  reference  to  town- 
ships 31-22,  31-23,  31-24,  31-25,  32-20,  32-22,  32-25, 
South,  Ranges  East,  M.  D.  B.  &  M.,  and  townships 
11-28  and  12-28  North,  Ranges  East,  S.  B.  B.  &  M., 
finding  or  learning  of  no  w^ells  on  them,  he  recom- 
mended, as  in  the  case  of  township  30  South,  Range 
23  East,  that  they  be  relieved  from  suspension.  In 
other  instances,  in  townships  in  which  upon  certain 
sections  he  found  or  learned  of  commercial  wells,  he 


47 

recommended  that  all  sections  upon  which  there 
were  no  wells  be  freed  of  the  embargo.  It  is  mani- 
fest that  he  was  guided,  as  he  stated  in  his  testimony, 
by  the  sole  and  simple  test  of  the  absence  or  pres- 
ence of  commercially  producing  wells.  With  refer- 
ence to  townships  29-30  and  29-21  South,  Ranges 
East,  M.  D.  B.  &  M.,  he  recommended,  although  he 
actually  found  oil  wells  thereupon,  that  they  be  re- 
lieved for  the  reason  that  the  wells  w^ere  not  pro- 
ducing in  paying  quantities. 

Explaining  his  recommendations  and  justifying 
his  action,  Eyan  stated  that  he  was  merely  following 
Instructions  (R.  1600).  As  to  half  of  the  townships 
his  recommendations  were  based  upon  hearsay  evi- 
dence— why  not,  he  asked,  since  they  had  been  origi- 
nally suspended  upon  such  evidence? 

On  cross-examination  Ryan,  with  reference  to 
township  30-23,  said: 

"My  examination  was  made  for  the  purpose 
of  ascertaining  if  there  Avere  any  oil  wells  on 
there;  and  I  found  no  oil  wells  and  hence  I 
made  that  report.  I  made  that  report  in  accord- 
ance with  instructions.  I  did  not  say  that  there 
were  no  oil  seepages.  When  I  said  that  I  found 
no  oil  seepages,  I  meant  that  as  a  fact.  And  I 
found  no  surface  or  other  indications  of  oil  or 
minerals  of  any  kind.  That  is  what  I  said  in 
my  report,  I  believe."    (R.  1602-3.) 

On  re-direct  he  said: 

**I  just  looked  along  the  road,  as  my  instruc- 
tions did  not  require  me  to  make  a  thorough 


48 

and  minute  investigation  of  the  land.  *  *  * 
The  language  used  by  me  in  these  reports,  viz., 
'oil  seepages,'  'oil  wells,'  'oil  springs,'  and  'sur- 
face indications  which  would  tend  in  my  opinion 
to  warrant  lands  being  classified  or  not  classified 
as  mineral  lands'  were  a  kind  of  stereotyped 
form  that  I  used.  I  find  it  running  through  all 
my  reports."  (R.  1605-6.) 

g.  The  order  of  the  Commissioner  of  the  General  Land  Office  re- 
lieving the  lands  in  suit  from  suspension. 

Exhibit  ZZZ  is  the  letter  of  the  Acting  Commis- 
sioner relieving  the  lands  in  suit  and  others  from 
suspension.  It  is  found  at  pages  1555  and  1556  of 
the  record  and  follows: 

N.  W.  O.  C. 

E.  C.  F.  H.  G.  P. 

Department  of  the  Interior 
General  Land  Office 

Address  only  the  Commissioner  of  the  General 

Land  Office. 

Washington,  D.  C, 
February  11,  1904. 
Register  and  Receiver, 
Yisalia,  California. 
Sirs: 

Bv  telegrams  "P"  of  February  21  and  28, 
1900,  townships  30  S.,  Range  23  E.,  and  32  S., 
R.  25  E.,  M.  D.  M.,  were  suspended  from  dis- 
position under  the  agricultural  land  laws  upon 
allegations  that  same  contained  deposits  of  min- 
eral (oil). 

I  am  now  in  receipt  of  a  report  from  a  special 
agent  of  this  office  who  has  examined  the  SW14 
Section  1;  Section  15;  NE14  and  ^Vo  Sec.  17; 
NE  1/4  and  SV>  Sec.  19 ;  Sections  21,  23,  25,  27, 
33,  35,  Township  30  S.,  R.  23  E. ;  the  SE14  Sec. 
23,  SW14  Sec.  25,  and  the  SWI/4  Sec.  27,  Town- 


49 

ship  32  S.,  E.  25  E.,  M.  D.  M.,  and  who  states 
that  a  careful  examination  thereof  failed  to  dis- 
close any  oil  seepages,  oil  springs,  surface  or 
other  indications  of  oil  or  minerals  of  any  kind 
that  would  tend  to  warrant  the  lands  being 
classed  as  mineral.  He  reconnnends  that  same 
be  relieved  from  suspension.  The  statements 
made  in  the  special  agent's  report  are  not  con- 
troverted by  the  records  of  this  office  and  it 
would  appear  that  during  the  period  of  nearly 
four  years  which  has  elapsed  since  said  sus- 
pension, any  persons  interested  in  the  mineral 
development  of  the  lands  have  had  ample  oppor- 
tunity to  explore  and  develop  the  same. 

In  view  of  these  facts,  it  appearing  that  no  oil 
or  mineral  of  any  kind  has  been  discovered  upon 
the  lands  in  question  it  is  believed  that  no  good 
reason  exists  for  the  further  suspension  thereof. 
Accordingly,  the  lands  hereinabove  described 
are  hereby  relieved  from  suspension. 

Make  the  proper  notations  upon  your  records. 

Very  respectfully, 

J.  H.  Fimple, 
IL  Assistant  Commissioner. 

It  is  noteworthy  that  this  letter  was  prepared  by 
the  witness  E.  C.  Finney,  whose  initials  appear  at 
the  head  and  who  testified  to  its  purpose  and  effect. 

h.     The  effect  of  the  foregoing  proceedings. 

A  brief  review  at  this  point  may  not  be  illtimed. 

The  railroad  compan}^  sought  patent  to  the  lands 
in  suit.  It  filed  its  selection  list.  This  was  sum- 
marily rejected  by  the  local  land  office  for  the 
reason  that  the  lands  were  under  suspension  and 
upon  that   ground   alone.     The   railroad  had   pre- 


50 

vioiislv  souQ'ht  from  Coiiuiiissioner  Hermann  a 
revocation  of  the  suspension,  but  had  failed  to 
secure  it.  The  railroad  appealed,  but,  before  it  did 
so,  its  Washington  attorney  had  asked  that  a  special 
agent  make  a  report  in  order  that  a  basis  for  the 
action  which  it  sought  might  be  had.  The  Com- 
missioner ordered  a  special  agent  to  make  an  ex- 
amination and  report  and  instructed  him  to  make 
a  recommendation  as  to  whether  the  lands  should 
be  relieved  from  suspension.  The  special  agent  made 
his  recommendation  that  the  lands  be  relieved  and 
the  Commissioner  so  ordered. 

At  no  point  in  the  proceedings  under  review  does 
it  appear  that  an  effort  was  made  to  ascertain  the 
true  character  of  the  lands.  The  railroad  did  not 
ask  it — the  special  agent  was  not  instructed  to  ascer- 
tain it — he  could  not  have  ascertained  it  because  of 
his  known  and  self-admitted  lack  of  qualifications — 
he  made  no  report  upon  their  true  character — the 
Commissioner  made  no  finding  as  to  it. 

The  outstanding  order  of  suspension  was  the  lion 
in  the  railroad's  path.  To  obtain  riddance  of  it  was 
the  direct  and  only  purpose.  As  long  as  this  order 
remained  in  force  the  lands  were  segregated  from 
the  public  domain  and  were  not  liable  to  entry  or 
location.  While  the  contention  of  counsel  for 
appellants  that  the  suspension  order  related  only 
to  non-mineral  entries  is  challenged  by  the  govern- 
ment, which  urges  that  it  barred  as  well  mineral 
locations,  it  is  admitted  by  all  that,  as  long  as  it 


51 

continued  unrevoked,  it  ahsolutely  withdrew  the 
lands  from  homestead  entries,  desert  land  entries, 
etc.,  and  railroad  selection. 

The  action  of  the  railroad  in  seeking  a  revocation 
of  the  suspension  was  not  in  the  nature  of  a  pro- 
ceeding in  aid  of  its  appeal  from  the  action  of  the 
local  land  officers  in  rejecting  selection  list  89,  that 
action  having,  as  already  shown,  antedated  the  ap- 
peal. What  it  sought  was  such  an  order  as  would 
give  its  selection  a  standing  before  the  local  land 
officers.  It  was  not  in  terms  seeking  a  classifi- 
cation of  the  lands  as  non-mineral,  though  the  letter 
of  Chambers  of  January  13,  1904,  to  Eberlein  hints 
that  there  might  have  been  such  a  hidden  object 
(R.  1486,  1487). 

The  sole  question  before  the  General  Land  Office 
was:  Shall  the  lands  be  relieved  from  suspension 
and  restored  to  their  original  status  as  part  of  the 
public  domain  and,  as  such,  open  to  all  forms  of 
entry,  mineral  and  non-mineral,  according  as  their 
true  character  might  turn  out  to  be? 

Nothing  but  the  order  of  suspension  of  February 
28,  1900,  took  the  lands  in  suit  out  of  the  category 
of  public  lands  open  to  such  forms  of  acquisition 
as  might  be  found  appropriate.  The  removal  of 
the  suspension  merely  restored  the  status  quo.  This 
reasoning  is  so  sound  and  the  conclusion  so  in- 
evitable as  not  to  require  elaboration  or  argument. 
It  was  certainly  the  opinion  entertained  by  the 
General  Land  Office  (E.  1587). 


52 

And  3^et  it  is  now  urged  that  b}^  the  proceedings 
under  review  the  government  investigated  and  ascer- 
tained the  true  character  of  the  lands  in  suit  and, 
having  done  so,  may  not  now  be  heard  to  say  that 
it  was  deceived  bv  the  representations  of  appellants, 
however  false  and  fraudulent  they  may  have  been. 
The  railroad  did  not  ask  for  a  classification  of  the 
lands  or  an  ascertainment  of  their  character;  the 
Commissioner  did  not  order  a  classification  or  an 
ascertainment;  the  special  agent  did  not  attempt 
either;  and  all  of  the  proceedings  resulted  only  in 
relief  from  the  effect  of  the  suspension.  Sus- 
pension from  what  *?  From  entry,  location,  selection ! 
The  status  quo  was  restored.  Had  there  been  no 
antecedent  suspension,  appellants  would  not  con- 
tend that  the  railroad's  non-mineral  affidavits  were 
merely  pro  forma  and  not  entitled  to  be  relied 
upon  and  not  relied  upon.  And  yet,  although  it  is 
manifest  that  the  proceedings  in  question  had  only 
the  effect  of  doing  away  with  the  suspension — mak- 
ing it  non-existent — appellants  gravely  contend  that 
the  removal  of  the  only  obstacle  to  the  status  quo 
was  more  than  it  purported  to  be,  more  than  they 
asked  for,  more  than  the  Commissioner  ordered — in 
fine,  that  it  was  a  finding  or  adjudication  that  the 
lands  which  they  coveted  were  non-mineral  and  of 
the  character  contemplated  by  their  grant. 

If  any  weight  were  to  be  given  to  the  circum- 
stance that  in  this  report  Ryan  stated  that  he  had 
made  a  careful  examination  and  had  found  no  sur- 
face  indications   that   would   warrant   the    classifi- 


53 

cation  of  the  lands  as  mineral  lands,  it  is  met  by 
two  considerations:  first,  that  he  was  not  chosen 
because  of  his  qualifications — ^lie  was  neither  a 
mineralogist  nor  geologist  nor  what  is  known  as  a 
practical  oil  man  and,  by  his  own  admission,  would 
not  have  known  a  gas  blow-out  if  he  had  seen  one — 
to  pass  upon  the  character  of  the  lands;  second, 
that  his  instructions  defined  his  duty,  which  was 
limited  to  recommending  whether  the  suspension 
should  be  continued  or  removed,  so  that,  even  if 
he  had  undertaken  to  ascertain  the  true  character 
of  and  classif V  the  lands,  he  would  have  been  beyond 
the  scope  of  his  authority,  without  the  course  of  his 
employment,  and  his  action  in  so  attempting  or 
doing  would  have  been  without  force  or  effect. 
Authorities  need  not  be  cited  to  support  this  prop- 
osition. 

The  contention  of  appellants  lacks  even  the  merit 
of  novelty.  In  many,  if  not  most,  of  the  suits 
brought  by  the  United  States  to  set  aside  fraudu- 
lent patents  it  has  been  urged  that  the  government 
ought  not  to  prevail  because  of  knowledge  possessed 
by  it  based  upon  some  alleged  investigation  made 
through  its  agents  or  obtained  at  a  hearing  or  other- 
wise. It  would  be  difficult  to  determine  which  has 
been  the  more  popular  with  defendants  in  such 
cases,  the  contention  just  mentioned  or  declamation 
with  respect  to  the  dignity  of  a  patent,  the  solemnity 
of  its  import  and  the  convincing,  overwhelming 
character  of  the  testimony  necessary  to  effect  its 
cancellation.     It  A^dll  suffice  to   examine  a  few  of 


54 

the  cases  setting  up  the  defense  of  direct  or  im- 
puted knowledge. 

United  States  vs.  Booth-KelUj  Lumher  Co.  et  al, 
203  Fed.  243,  decided  in  this  court  February  24, 
1913,  was  a  suit  to  set  aside  patents  under  the 
Timber  and  Stone  Act  on  the  ground  that  the  initial 
application  of  the  individual  patentees  had  been 
fraudulently  made  by  them  for  the  use  and  benefit 
of  the  corporate  defendant.  In  the  answer  of  the 
Lumber  Company  there  was  this  allegation: 

"That  this  defendant  is  informed  and  be- 
lieves and  therefore  alleges  that,  after  the  said 
entries  mentioned  in  said  bill  were  made  by 
said  several  entrymen,  charges  were  made  and 
filed  with  the  complainant's  officials  in  the 
Interior  Department,  whose  duty  it  was  to  in- 
vestigate and  determine  the  same,  that  said 
entries  were  fraudulent  in  character  and  were 
made  for  the  benefit  of  this  defendant  and  that 
said  charges  were  fully  investigated  by  the 
Interior  Department  for  the  purpose  of  as- 
certaining the  truth  or  falsity  of  said  charges 
and  to  determine  whether  patents  should  be 
issued  upon  said  entries  or  whether  the  same 
should  be  canceled  and  that  such  proceedings 
were  had  in  said  matters  that  said  several  en- 
tries were  fully  investigated  by  complainant's 
officials  charged  with  that  duty  and  testimony 
and  affidavits  were  taken  upon  said  investi- 
gation and  the  complainant  and  said  entry- 
men  were  duh^  represented  at  said  hearing 
and  investigation  and  that,  upon  a  full  in- 
vestigation and  hearing  upon  said  charges,  and 
with  full  knowledge  of  all  the  facts,  it  was 
found  and  determined  by  the  said  officials 
that  said  entries  w^ere  not  fraudulent  and  that 


55 

the  irregularities  in  said  entries,  if  any,  were 
not  of  sufficient  gravity  to  require  or  justify 
the  cancellation  of  said  entries  and  ordered 
that  patents  issue  upon  said  entries  for  said 
land  and  that  patents  were  thereupon  issued 
therefor,  as  alleged  in  said  bill  of  complaint." 

The  defense  thus  raised  was  not,  as  will  appear 
from  a  careful  reading  of  the  opinion  by  Judge 
Gilbert,  considered  of  sufficient  importance  to  be 
even  noticed  by  the  Court  which  reversed  the  decree 
of  the  lower  court  and  ordered  the  fraudulent 
patents  annulled  and  cancelled. 

In  the  case  under  review  it  will  be  observed  that 
the  allegations  of  the  defense  were  more  far-reach- 
ing than  those  of  appellants  in  the  instant  case. 
Here  it  is  merely  that  the  government  made  an 
investigation — there,  that  there  was  a  hearing  at 
which  all  parties  were  represented  and,  indeed,  what 
amounted  to  a  trial  and  was  urged  as  an  adjudi- 
cation of  the  very  question  presented  in  the  appeal. 

Washington  Securities  Co.  vs.  United  States,  234 
U.  S.  76;  58  L.  Ed.,  1220,  was  a  suit  in  equity  to 
cancel  four  patents  issued  under  the  commutation 
provision  of  the  homestead  law.  The  bill  charged 
that  the  patents  were  fraudulently  procured  by 
falsely  representing  to  the  land  officers  that  the 
lands  were  agricultural  in  character  and  therefore 
subject  to  homestead  entry,  when  in  truth  they 
were  at  the  time  known  to  be  valuable  coal  lands. 
Among  other  things,  it  was  contended  that  the  pro- 
ceedings resulting  in  the  patents  were  not  ex  parte, 


56 

but  adversary;  that  the  land  officers  found  the  land 
to  be  agricultural  in  character  and  that  this  finding 
was  conclusive  upon  the  government.  (This  is  the 
very  contention  made  in  the  instant  case  and  it 
cannot  be  distinguished  from  the  case  under  review 
on  the  ground  that  in  the  one  there  was  a  so-called 
field  investigation,  whereas  in  the  other  the  investi- 
gation was  confined  to  the  quasi-judicial  tribunal, 
the  local  land  office.  If  an  investigation  by  the 
deciding  tribunal  is  not  binding,  a  fortiori  an  in- 
vestigation by  one  which  has  nothing  to  do  with  the 
decision  is  even  less  so.)  Upon  the  contention 
so  raised  in  the  Washington  Securities  case  the 
Supreme  Court,  speaking  through  Mr.  Justice  Van 
Devanter,  says: 

"No  doubt  those  officers  found  from  the  proof 
submitted  to  them  that  the  lands  were  agri- 
cultural and  not  coal  lands,  but  the  proceedings 
were  not  adversar}^  in  any  true  sense  of  the 
term.  The  applications  and  proofs  of  the  entry- 
men  were  entirely  ex  parte.  The  government 
was  not  called  upon  to  make  any  adverse  show- 
ing, no  issue  was  framed,  no  hearing  was  had 
and  no  one  represented  the  government  save  in 
the  sense  that  the  land  officers  did  so.  As  this 
court  has  often  held,  the  finding  of  the  land  of- 
ficers in  such  a  proceeding,  although  not  open  to 
collateral  attack,  is  not  conclusive  against  the 
government  when  it  seeks  to  cancel  the  result- 
ing patent  upon  the  ground  that  it  was  ob- 
tained bv  means  of  false  and  fraudulent  proofs. 
United  States  vs.  Minor,  114  U.  S.,  233 ;  29  L. 
Ed.,  ilO;  J.  J.  MeCaskill  Co.  vs.  U.  S.,  216  U.  S. 
504,  509;  54  L.  Ed.,  590,  594,  and  cases  cited. 
In  such  a  suit  the  action  of  the  land  officers  is 
given  appropriate  effect  by  treating  it  as  pre- 


57 

siimptively  right  and  as  requiring  tlie  govern- 
ment to  carry  the  burden  of  proving  the  fraud 
by  that  class  of  evidence  which  commands  re- 
spect and  that  amount  of  it  which  produces  con- 
viction. Diamond  Coal  &  Coke  Co.  vs.  United 
States  2'i'd\].  S.  236,  239." 

The  quoted  language  fits  the  instant  case  as  per- 
fectly as  if  written  exiDressly  for  it.  Here  ''the  ap- 
plication and  proofs  were  strictly  ex  parte".  Here 
''the  government  was  not  called  upon  to  make  any 
adverse  showing,  no  issue  was  framed,  no  hearing 
was  had  and  no  one  represented  the  government  save 
in  the  sense  that  the  land  officers  did  so." 

Appellants  would,  upon  the  fact  that  the  Com- 
missioner in  his  letter.  Exhibit  12-0  (R.  3834-5), 
refers  to  this  matter  as  a  quasi-contest,  imi)ort  into 
it  the  character  of  a  real  contest.  This  would  have 
the  effect  of  changing  the  meaning  of  the  words  and 
would  destroy  the  very  distinction  entering  into  the 
words  employed  by  the  Commissioner.  Further- 
more, if  the  Commissioner  had  used  the  very  word 
"contest"  itself  without  the  attached  word  of  quali- 
fication, it  would  matter  nothing,  since  the  question 
is  not  what  he  called  it,  but  what  it  reallv  was. 

Again,  it  is  to  be  remembered  that  the  original 
request  that  the  lands  be  "relieved  of  suspension" 
and  the  immediate  request  upon  which  Eyan  was 
instructed  antedated  the  appeal  from  the  rejection 
by  the  Register  and  Receiver  at  Visalia;  from  which 
it  follows  that  tliere  luas  no  proceeding  of  any  char- 
acter before  the  Commissioner,  to  say  nothing  of  a 


58 

contest.  It  all  reverts  to  this:  that  there  had  been 
a  suspension  from  disposition  of  lands  including 
those  which  the  railroad  then  desired  to  select — so 
long  as  this  suspension  was  in  force  there  could  be 
no  selection — and  the  railroad  sought  to  get  the  sus- 
pension out  of  the  way  and,  accordingh^,  before  there 
had  been  any  sort  of  action  in  its  attempted  selec- 
tion, appealed  to  the  Commissioner  for  an  order  of 
revocation.  The  instructions  to  the  special  agent, 
his  recommendation  that  the  suspension  be  revoked 
and  the  favorable  action  thereupon  by  the  Com- 
missioner, all  at  the  request  of  the  railroad,  are  now 
sought  by  appellants  to  be  tortured  and  dignified 
into  a  contest.  The  mere  statement  of  the  facts  is  a 
complete  refutation  of  their  contention  that  there 
was  a  contest,  that  there  was  a  determination  by  the 
government  of  the  true  character  of  the  lands  in 
suit  and  that  the  government  is  now  estopped  to 
deny  the  truth  of  false  and  fraudulent  proofs. 

In  United  States  vs.  Minor,  114  U.  S.  377 ;  29  L. 
Ed.,  110,  it  is  plainly  held  that  the  doctrine  of  the 
conclusiveness  of  judgments  and  decrees  of  court  as 
between  those  who  are  parties  to  the  litigation  is  not 
applicable  to  the  United  States  in  regard  to  pro- 
ceedings before  its  land  officers  in  granting  patents 
to  the  public  lands ;  that,  when  it  is  said  that  in  some 
cases  the  land  department  exercises  functions  in 
their  nature  judicial,  it  has  reference  to  cases  in 
which  individuals  have,  as  between  themselves,  con- 
tested the  right  to  a  patent  before  that  department, 
the  decision  of  which  as  to  the  facts  before  it  is  held 


59 

to  be  conclusive  between  such  parties ;  but  that  fraud 
upon  that  department  has  been  always  held  to  be 
subject  to  remedy  in  equity  and  that,  when  there  has 
been  no  contest  and  the  claimant  proceeds  without 
opposition  in  his  ex  parte  proof,  it  is  especially  iiec- 
essary  that  equity  afford  the  government  a  remedy 
if  those  proofs  are  founded  in  fraud.  The  contest 
that  furnishes  the  basis  of  conclusiveness  is  clearly 
the  contest  between  individual  claimants.  Such  was 
the  situation  in  Tulare  Oil  &  Mining  Co.  vs.  South- 
ern Pacific  Railroad  Co.,  29  L.  D.  269,  a  case  strongly 
relied  on  by  counsel  for  appellants  upon  the  argu- 
ment below.  It  was  on  its  face  an  actual  contest 
between  the  parties  to  the  litigation. 

In  the  Minor  case,  supra,  the  reasons  why  the  gov- 
ernment in  this  class  of  cases  should  not  be  held  to, 
the  same  diligence  in  guarding  against  fraud  as  a 
private  owner  of  real  estate,  founded  upon  the  vast 
extent  of  the  public  domain  and  the  paucity  of  land 
officers,  are  convincingly  set  out.  This  is  also  shown 
in  the  fact  that  in  more  than  nine  cases  out  of  ten 
the  applicant  "has  it  all  his  own  way";  he  makes 
his  own  statement  and  produces  his  own  affidavits. 
"If  these  affidavits  meet  the  requirements  of  the 
law,  the  claimant  succeeds  and  what  is  required  is 
so  well  known  that  it  is  reduced  to  a  formula.  It  is 
not  possible  for  the  officers  of  the  government,  ex- 
cept in  a  few  rare  instances,  to  know  anything  of 
the  truth  or  falsehood  of  these  statements.  In  the 
cases  where  there  is  no  contesting  claimant  there  is 
no   adversary    proceeding   whatever.      The    United 


60 

States  is  passive;  it  opiDOses  no  resistance  to  the 
establishment  of  the  claim  and  makes  no  issue  on  the 
statement  of  the  claimant."  These  quoted  words 
from  the  Minor  case  are  aptly  descriptive  of  the 
facts  of  the  instant  case  and  the  principles  under- 
lying them  are  destructive  of  the  contentions  of  ap- 
pellants. 

Many  other  cases  might  be  cited  and  reviewed; 
but  those  above  referred  to  support  fully  the  posi- 
tion of  the  government  that  nothing  was  done,  no 
proceedings  were  had,  in  the  land  department  in 
connection  with  the  patent  here  under  attack  that 
stands  in  the  way  of  the  equitable  remedy  of  can- 
cellation now  invoked. 

The  only  person  connected  in  any  capacity  with 
the  government  who  appears  upon  this  record  even 
to  have  seen  the  lands  in  suit  is  special  agent  Eyan. 
It  is  manifest  that  he  w^as  neither  instructed  to 
make  nor  made  any  examination  or  investigation  of 
them  for  the  purpose  of  ascertaining  whether  they 
were  mineral  or  non-mineral  in  character.  The  sub- 
stance and  extent  of  his  report  was  that  lie  saw  no 
superficial  evidence  of  their  mineral  character.  It 
is  also  affirmatively  shown  that  his  lack  of  fitness 
to  pass  upon  the  character  of  land  was  well  known 
both  to  the  land  department  and  to  himself.  To 
seriously  (contend  that  upon  such  a  record  there  is 
any  evidence  to  sustain  the  proposition  that  the  gov- 
ernment actually  for  itself  and  by  its  own  processes 
ascertained  as  a  fact  that  the  lands  in  suit  were  non- 


61 

mineral  would  seem  to  be  put  forward,  it  is  respect- 
fully submitted,  only  for  the  purpose  of  multiplying 
tlie  errors  assigned  and  to  distract  attention  from 
the  plenary  evidence  of  the  false  and  fraudulent 
character  of  the  proofs  offered  by  the  railroad  in 
support  of  its  application  for  patent  to  the  lands  in 
suit. 

Since  there  w-as  no  investigation  nor  ascertain- 
ment by  the  government  of  the  true  character  of  the 
lands  in  suit,  a  fortiori  there  was  no  determination 
nor  adjudication  of  their  non-mineral  character. 
As  shown  by  the  cited  cases,  there  is  no  such  ad- 
judication save  in  cases,  like  the  Tulare  Oil  &  Min- 
ing Co.  case,  supra,  where  there  is  a  contest  between 
parties  to  the  litigation. 

Finally,  the  position  of  the  government  upon  this 
question  is :  By  the  order  of  suspension  of  February 
28,  1900,  the  lands  in  suit  were  segregated  from  the 
public  domain  open  to  entry,  selection  and  location. 
They  could  thereafter  be  acquired  for  no  purpose. 
The  local  land  officers,  the  Register  and  Receiver, 
had,  as  it  were,  no  jurisdiction  whatever  over  them. 
They  could  not  entertain  any  sort  of  an  application 
to  acquire  them  for  the  reason  that  they  were  not 
open  or  subject  to  acquisition.  Accordingly,  when 
selection  list  89  was  filed,  they  summarily  rejected 
it.  Their  action  was  analogous  to  that  of  a  court 
which  dismisses  a  case  for  want  of  jurisdiction. 
They  no  more  considered  the  evidence  upon  the 
merits,  that  is,  as  to  the  character  of  the  land,  than 


6'J 

a  court  would  have  considered  evidence  upon  the 
merits  of  a  cause  as  to  which  it  had  decided  in  limme 
that  it  was  without  jurisdiction. 

From  the  order  simimarily  rejecting  its  applica- 
tion the  railroad  appealed  to  the  Commissioner  of 
the  General  Land  Office.  While  the  appeal  was  pend- 
ing the  Commissioner  relieved  the  lands  sought 
to  be  selected  from  the  suspension.  If  he  had  re- 
garded the  investigation  and  report  of  Ryan  and 
his  own  order  of  relief  as  an  ascertainment  and  de- 
termination of  the  non-mineral  character  of  the 
lands,  why  did  he  not,  instead  of  returning  the  list 
to  the  local  land  officers,  clear-list  the  lands  and 
issue  patent?  The  answer  is  obvious:  for  the  rea- 
son that  the  function  of  passing  upon  proofs  be- 
longs to  the  local  land  officers;  the  lands  had  been 
restored  to  the  public  domain  and  were  open  to  ap- 
propriate acquisition  upon  compliance  with  depart- 
mental regulations  and  requirements;  a  situation 
different  from  that  which  obtained  when  the  list  was 
rejected  was  presented;  the  lands  were  restored  to 
the  condition  in  which  they  were  before  suspension 
and  no  want  of  jurisdiction  was  now  in  the  way  of 
the  consideration  of  the  proofs  submitted;  and  it 
was  necessary  that  the  local  land  officers  pass  upon 
the  question  of  the  true  character  of  the  lands  be- 
fore patent  could  issue.  Accordingly,  the  Com- 
missioner, while  advising  the  Register  and  Receiver 
that  their  action  in  rejecting  the  list  "was  correct 
under  conditions  then  existing",  returns  the  list 
''for  appropriate  action"  with  the  statement:  "It 


63 

would  therefore  appear  that  said  application  to 
select  may  now  be  granted  if  no  other  objection 
tJiereto  exists"    (Exhibit  12-0;  E.  3835). 

The  proofs  consisted  wholly  of  the  Eberlein  af- 
fidavits. They  had  accompanied  the  list  when  filed, 
but  had  in  the  very  nature  of  the  case  received  no 
consideration.  Thev  could  now  be  considered  upon 
the  question  of  the  character  of  the  land,  the  deter- 
mination of  which  in  favor  of  the  truth  of  the  af- 
fidavits was  a  condition  precedent  to  clear-listing 
and  patent.  If  the  revocation  of  the  suspension 
amounted  to  a  determination  that  the  lands  were 
non-mineral,  then  there  was  nothing  .for  the  local 
land  officers  to  do.  Surely,  it  will  not  be  suggested 
that  the  Commissioner  directed  his  inferior  officers 
to  affirm  his  action.  If  his  action  had  the  effect  at- 
tributed to  it  by  appellants,  he  is  placed  in  the  ab- 
surd position  of  opening  that  action  to  review  and 
possible  reversal  by  his  subordinates.  AVhat  he 
actually  did  was  to  send  the  list  back  to  the  Register 
and  Eeceiver  with  directions  which  amounted  to  an 
instruction  that  they  were,  under  the  changed  con- 
dition, at  liberty  to  hear  the  railroad's  proofs  and 
themselves  determine  thereupon  whether  the  lands 
should  go  to  patent.  That  the  only  proofs  offered 
or  produced  during  the  pendency  of  the  application 
to  select  and  forwarded  to  the  Commissioner  with 
the  appeal  were  the  affidavits  of  Eberlein  appears 
from  the  testimony  of  the  Register  himself,  George 
W.  Stewart.  R.  3784-5.)  This  was  all  that  was  re- 
quired by  the  regulation  heretofore  mentioned.    The 


64 

fact  that  this  was  known  to  the  railroad  was  notice 
to  it  of  the  reliance  placed  in  such  proofs  and  im- 
posed upon  it  the  high  duty  of  strict  truth. 

II. 
THE  GOVERNMENT  HAD  NOT  PRIOR  TO  OR 
AT  THE  TIME  OF  PATENT  EQUAL  KNOWLEDGE 
WITH  APPELLANTS  OF  THE  TRUE  CHARACTER 
OF  THE  LANDS  IN  SUIT  AND  THEREFORE  HAD 
THE  RIGHT  TO  AND  DID  RELY  SOLELY  UPON 
THEIR  PROOFS. 

1.     The  question  of  knowledge. 

Little  need  be  said  beyond  again  calling  attention 
to  the  case  of  United  States  vs.  Minor,  supra;  to 
the  fact  that  no  official  or  agent  of  the  government 
other  than  special  agent  Ryan  is  shown  ever  to 
have  seen  the  lands  in  suit;  and  to  the  conspicuous 
diligence  of  officials  and  agents  of  appellants  in  the 
examination  and  investigation  of  lands  within  the 
granted  limits  in  California  prior  to  and  at  the  time 
of  patent.  Furthermore,  it  was  the  duty  of  the 
Southern  Pacific  Railroad  Company  to  ascertain 
the  true  character  of  all  lands  to  which  it  sought 
patents.  This  duty  arose  as  well  out  of  the  rela- 
tionship of  the  railroad  to  the  government  by  reason 
of  the  exception  of  mineral  lands  from  the  opera- 
tion of  the  granting  act  as  of  the  duty  imposed  by 
the  regulation  of  the  Secretary  of  the  Interior  of 
July  9,  1894,  19  L.  D.  21,  promulgated  pursuant  to 
authority  conferred  on  him  by  the  granting  act,  re- 
quiring proof  b}^  affidavit  of  its  land  agent  of  the 
careful  examination  of  land  sought  to  be  patented 


65 

and  of  its  non-mineral  character.  Counsel  for  ap- 
pellants contend  that  such  requirement  was  ''merely 
formal",  the  implied  argument  being  that  it  was 
therefore  immaterial  whether  the  affidavit  was  false 
or  true.  It  is  sufficient  upon  this  point  to  suggest 
that  the  Supreme  Court  in  the  Minor  case,  supra, 
while  recognizing  that,  in  the  matter  of  proofs, 
"what  is  required  is  so  well  known  that  it  is  re- 
duced to  a  formula",  none  the  less  held  that,  since 
in  that  case  that  requirement,  while  observed,  was 
falsely  met,  it  vitiated  the  patent  there  assailed. 

If  whatever  knowledge  Eyan  had  were  imputable 
to  the  government,  it  would  amount  only  to  this :  that 
during  three  days'  examination  of  thirty-six  square 
miles  of  land  he  had  found  no  oil  springs,  oil  seep- 
ages nor  croppings  of  oil  sand  upon  the  lands  in  suit 
and  that  in  his  opinion  they  should  be  relieved  from 
suspension.     From  this  to  knowledge  or  notice  on 
the  part  of  the  government  of  the  true  character  of 
the  lands  is  a  far  cry.    It  is  equally  as  far  removed 
from  the  condition  which  the  record  discloses  of  the 
knowledge  of  appellants.     Since  the  extent  and  ac- 
curacy of  that  knowledge  must  and  will  be  reviewed 
at  length  in  connection  with  the  main  features  of  the 
case,  namely,  the  question  of  the  fraud  of  appellants, 
it  is  deemed  unnecessary  to  here  anticipate  a  review 
of  the  evidence.     Suffice  it  to  say  that  the  record 
proves  conclusively  the  presence  upon  these  lands 
or  in  the  immediate  vicinity  prior  to  patent  of  of- 
ficials of  appellants,  high  and  low,  ranging  from 
presidents  and  vice-presidents  down  to  land-graders ; 


66 

tlie  maintenance  by  appellants  prior  to  patent  of  a 
corps  of  skilled  geologists  who  examined,  investi- 
gated and  gathered  information  and  facts  concern- 
ing these  and  other  oil  lands;  and  even  the  location 
for  minerals  of  some  of  the  lands  in  suit  and  of  the 
even  numbered  sections  with  which  they  are  inter- 
spersed by  geologists,  oil  experts,  engineers  and  di- 
vision superintendents  of  appellants.  It  is  true  that 
the  lands  granted  to  the  railroad  were  of  such  extent 
as  to  constitute  an  empire ;  but  it  is  equally  true  that 
they  were  but  a  small  fraction  of  the  public  domain. 

The  following  from  the  opinion  in  the  Minor  case, 
supra,  aptly  describes  the  situation: 

"The  government  owns  millions  and  millions 
of  acres  of  land  *  *  *  There  is  established 
in  each  land  district  an  office  in  which  are  two 
officers,  and  no  more,  called  Eegister  and  Re- 
ceiver. These  districts  often  include  twenty 
thousand  square  miles  or  more  *  *  *  When 
therefore  he  (an  applicant  for  patent)  succeeds 
by  misrepresentation,  by  fraudulent  practices, 
aided  by  perjury,  there  would  seem  to  be  more 
reason  why  the  United  States,  as  the  owner  of 
land  of  which  it  has  been  defrauded  by  these 
means,  should  have  remedv  aarainst  the  fraud — 
all  the  remedy  which  the  courts  can  give — than 
in  the  case  of  a  private  owner  of  a  few  acres  of 
land  on  whom  a  like  fraud  has  been  practiced 


?  ? 


The  legal  effect  sought  to  be  given  to  the  thesis 
that  the  government  had  equal  knowledge  with  ap- 
pellants is  that  it  had  no  right  to  rely  on  the  proofs 
offered  by  the  railroad,  the  affidavits  in  question 
being,  according  to  the  argument  of  counsel  below, 
"mere  red  tape".    This  position  illy  comports  with 


67 

the  character  which  men  are  in  the  habit  of  ascribing 
to  evidence  under  oath.  It  is  true,  as  in  the  Minor 
case,  that  "what  is  required  is  so  well  understood  as 
to  be  reduced  to  a  formula";  but  the  formula  is  in-, 
dicative  of  the  well  known  character  of  the  proof 
required — not  of  a  lack  of  importance  or  an  invita- 
tion to  falsehood.  The  "formula",  falsely  sworn  to, 
was  all  the  fraud  there  was  in  the  Minor  case  and 
yet  the  court  held  that  the  government  "should  have 
remedv  aarainst  that  fraud — all  the  remedv  which 
the  courts  can  give".  The  "formula",  if  the  appel- 
lants had  been  in  need  of  information,  conveyed  most 
accurate  knowledge  of  what  had  to  be  proven ;  and 
the  acting  land  agent  made  his  oath  according  to 
that  "formula",  swearing  falsely  to  what  was  neces- 
sary in  order  to  secure  the  coveted  patent.  The 
falseness  in  every  particular  of  his  affidavit  accord- 
ing to  "formula"  was  shown  by  the  evidence  and  in 
at  least  one  particular  was  admitted  by  him  on  the 
stand  (R.  1088).  Since  the  whole  includes  all  the 
parts  and  counsel  for  appellants  say  that  the  whole 
affidavit  was  immaterial  and  not  intended  to  be  re- 
lied on  and  was  not  relied  on,  it  will  doubtless  be 
urged  that  it  mattered  not  that  the  affidavit  was 
admittedly  false  in  one  particular.  Even  in  the 
ordinary  affairs  of  life  men  do  not  so  lightly  ap- 
praise an  oath  and  it  is  surprising  that  in  a  court  of 
equity  it  should  be  put  forward  that,  because  an 
oath  is  according  to  "formula",  its  falsity  is  not 
matter  of  concern. 


68 

2.     The  question  of  reliance. 

There  is  little  direct  testimony  upon  this  question. 
The  outstanding  fact  is  that  the  non-mineral  affi- 
davits were  made  by  the  regulation  of  July  9,  1894, 
set  out  in  full  on  page  3  of  this  brief,  the  sme  qua 
non  of  the  issuance  of  patent.  The  contention  of  ap- 
pellants amounts  to  this:  that,  although  they  could 
not  have  secured  the  patent  without  it,  nevertheless 
the  affidavit  was  of  no  moment  and  the  government 
had  no  right  to  rely  upon  it.  The  indispensable  is  not 
customarily  regarded  as  immaterial  and  unessential. 
The  fact  remains  that  the  railroad  could  not  have 
gotten  the  patent  if  its  acting  land  agent  had  not 
made  the  required  affidavits  which  appellants  now 
say  constitute  no  part  of  the  inducement  or  showing 
upon  which  favorable  action  was  based  by  the  land 
officers. 

The  only  direct  testimony  in  the  record  bearing 
upon  this  question  is  that  of  the  government  wit- 
nesses Finney  and  Stewart,  the  former  of  whom 
stated  that,  throughout  the  entire  period  of  his  serv- 
ice in  the  General  Land  Office,  that  is,  from  1894 
to  1909,  that  office  adjudicated  ex  parte  cases, 
whether  selections  or  entries,  upon  affidavits  or 
other  proofs  submitted  by  the  selector  or  entryman 
in  accordance  with  pertinent  regulations;  but  that, 
in  cases  contested  by  third  parties,  it  was  the  prac- 
tice to  have  hearings  or  trials  at  which  the  testi- 
mony of  witnesses  might  be  taken,  reduced  to  writ- 
ing and  thereafter  passed  upon.     He  further  ex- 


69 

pressly  stated  that,  in  a  selection  or  entr}^  in  which 
there  was  no  contest  by  a  third  person,  the  depart- 
ment would  not  base  its  action  upon  an  agent's  re- 
port, if  one  there  happened  to  be,  but  upon  the 
proofs  submitted  by  the  selector  or  entryman  in  sup- 
port of  his  application  (E.  1584).  If,  however, 
there  was  in  any  case  a  special  agent's  report  that 
was  unfavorable  to  the  contention  of  the  selector  or 
entr}Tiian  that  the  land  sought  to  be  acquired  was 
non-mineral,  it  might  result  in  a  rule  or  order  by  the 
Commissioner  for  a  hearing  at  which  both  the  se- 
lector or  entr^Tnan  and  the  government  might  in- 
troduce evidence  concerning  the  character  of  the 
land;  but,  whether  there  was  no  agent's  report  or 
there  was  a  favorable  one,  the  ex  parte  proofs  of- 
fered by  the  selector  or  entrjonan  being  uncontro- 
verted,  it  was  the  practice  of  the  General  Land 
Office  to  accept  such  proofs  at  their  face  value  (R. 
1592). 

The  fact  that  the  railroad  recognized  and  acted 
upon  the  necessity  of  offering  proof  is  conclusive 
of  the  materialty  of  the  proof  and  of  its  recognition 
of  the  effect  of  the  order  of  relief  from  suspension, 
viz.,  the  restoration  of  the  suspended  lands  to  the 
status  quo  of  ante-suspension  days. 

Stewart,  the  Register  at  Yisalia,  testified  that 
during  the  pendency  and  consideration  of  the  appli- 
cation to  select  the  lands  in  suit — that  is,  what  is  so 
often  referred  to  as  list  89 — the  only  evidence  of  the 
character  of  the  lands  which  was  offered  bv  the  rail- 


70 

road  and  taken  into  account  by  the  Register  and 
Eeceiver  was  the  affidavits  of  Eberlein;  and  that 
these  affidavits  constituted  the  sole  and  entire  evi- 
dence upon  the  question  forwarded  to  the  General 
Land  Office  b}^  the  local  land  officers  at  Visalia  (E. 
3783-4). 

Thus,  it  affirmatively  appears  from  the  testimony 
of  the  only  witnesses  who  spoke  to  the  point  that  the 
only  evidence  of  the  non-mineral  character  of  the 
lands  in  suit  which  was  considered  by  the  land  de- 
partment of  the  government  was  that  offered  by  the 
railroad  and  consisted  solely  of  the  affidavits  of  the 
railroad's  acting  land  agent  which  appellants  now 
stigmatize  as  ''pro  forma"  and  neither  intended 
nor  received  seriously;  albeit  they  were  addressed 
to  and  concerned  with  the  only  open  question  in  the 
matter  and  constituted  the  sine  qua  non  of  the  appl- 
cation. 

III. 

THE  LANDS  IN  SUIT  WERE  AT  THE  TIME 
OF  THE  PROCEEDINGS  THAT  RESULTED  IN 
PATENT  KNOWN  MINERAL  LANDS. 

Introductory. 

The  case  upon  which  the  govermnent  relies  as  lay- 
ing down  the  rule  or  standard  for  the  determination 
in  advance  of  development  of  what  are  known  min- 
eral lands  is  Diaynond  Coal  &  Coke  Company  vs. 
United  States,  233  U.  S.  236,  58  L.  Ed.,  936.  A  re- 
view of  this  case  as  preparatory  to  the  consideration 
of  the  evidence  is  thought  expedient  to  the  end  that 


71 

the  relevancy  of  the  facts  may  be  readily  appreci- 
ated. This  case  is  the  authority  upon  which  Judge 
Bean,  the  trial  judge,  founded  the  decree  from  which 
this  appeal  is  prosecuted.  While  the  opinion  post- 
dated the  conclusion  of  the  testimony,  it  was  handed 
down  before  the  argument  and  decree. 

THE  DIAMOND  COAL  AND  COKE  COMPAI^TY  CASE. 

The  Diamond  Coal  &  Coke  Company  case  was  a 
suit  in  equity  brought  by  the  United  States  in  the 
circuit   court  for  the  district  of  AYyoming  to  set 
aside  patents  to  lands  alleged  in  the  bill  to  contain 
valuable  deposits  of  coal.     The  patents  had  been 
applied  for  by  and  issued  to  two  individuals,  Sned- 
don and  Harrison,  under  the  homestead  law  upon 
soldiers'  additional  homestead  entries,  and  they  sub- 
sequently conveyed  the  lands  in  suit  to  the  Diamond 
Coal  &  Coke  Co.     Each  of  the  applications  for  pa- 
tents had  been  accompanied  by  an  affidavit  by  one 
or  the  other  of  these  individuals  to  the  effect  that  he 
was  well  acquainted  with  the  land,  had  passed  over 
it  frequently  and  could  testify  understandingly  about 
it;  that  there  was  not,  to  his  knowledge,  any  deposit 
of  coal  or  other  valuable  mineral  within  its  limits 
and  that  it  was  essentially  non-mineral;  and  that 
application  was  made  with  the  object  of  securing  it 
for  agricultural  purposes  and  not  of  fraudulently 
obtaining  title  to  mineral  land.     The  bill  charged 
that  the  affidavits  were  false  and  that  the  entries 
and  patents  were  procured  in  the  execution  of  a 
fraudulent    scheme    to    acquire    known    coal    lands 
under  soldiers'  additional  homestead  entries.     The 


72 


principal  issue  in  the  case  was  whether  the  lands 
were  known  to  be  valuable  for  coal  when  the  appli- 
cations for  the  entries  were  made. 

The  trial  court  found  for  the  defendants  and  the 
government  appealed  to  the  Circuit  Court  of  Ap- 
peals for  the  Eighth  Circuit  which  reversed  the 
action  of  the  lower  court,  191  Fed.  186.  There- 
upon the  coal  company  appealed  to  the  Supreme 
Court,  which,  in  an  opinion  delivered  by  Mr.  Jus- 
tice Van  Devanter,  affirmed  the  decree  of  the  circuit 
court  of  appeals.  The  essential  facts  set  out  in  the 
opinion  are  as  follows: 

"The  proceedings  in  the  land  office  began  in 
May,  1899.  Most  of  the  applications  were  filed 
during  that  year  and  passed  to  patent  in  1901. 
The  others  were  presented  and  acted  upon  in 
succeeding  years.  The  patents  were  all  se- 
cured by  means  of  affidavits  and  proofs,  as  be- 
fore indicated,  declaring  that  the  lands  were 
essentially  non-mineral,  were  not  known  to  con- 
tain any'^deposit  of  coal,  and  were  sought  for 
agricultural  purposes,  and  not  as  mineral  land. 
For  many  years  the  district  in  which  the  lands 
were  situate  had  been  known  to  contain  coal. 
They  were  surveyed  in  1874,  and  the  surveyor 
reported  one  of  the  sections  as  coal  land,  the 
others  being  contiguous  to  lands  similarly  re- 
ported. This  was  shown  in  the  field  notes  and 
upon  the  official  plats.  The  lands  were  in  a  val- 
ley, 3  or  4  miles  in  width,  bounded  on  the  east 
and  west  by  foothills.  A  thick  bed  of  coal  was 
disclosed  in  the  eastern  face  of  the  western  hills, 
but  its  quality  was  not  such  as  to  make  it  of 
commercial  value.  Along  the  western  base  of 
the  eastern  hills  was  the  outcrop  of  another 
coal  bed.      This   outcrop   had   been   weathered 


73 

down  and  in  some  places  covered  by  the  wash 
from  above,  but  it  could  be  traced  upon 
the  surface  for  several  miles.  It  had  been 
opened  up  at  different  places  and  the  openings 
disclosed  a  coal  bed,  from  6  to  14  feet  feet  in 
thickness,  dipping  to  the  west  at  an  angle  of 
from  15  to  25  degrees  from  the  horizontal,  as 
did  the  cretaceous  rocks  with  which  it  was  inter- 
stratified.  This  coal  was  of  superior  quality 
and  recognized  connnercial  value  and  the  rocks 
containing  it  were  the  coal-bearing  strata  of 
that  region.  The  lands  in  controversy  were 
west  of  the  outcrop  in  the  direction  of  the  dip. 
Some  were  near  the  outcrop  and  the  east  line 
of  the  farthest  section  was  about  a  mile  and  a 
half  away.  There  was  nothing  upon  their  sur- 
face showing  the  presence  of  coal  beneath  nor 
anything  indicating  that  the  bed  outcropping  on 
the  east  and  dipping  to  the  west  did  not  pass 
through  them.  Unless  valuable  for  coal,  they 
were  not  worth  to  exceed  a  dollar  and  a  quarter 
an  acre.  They  were  arid  sage-brush  lands,  about 
7,000  feet  above  sea  level,  and  afforded  very 
limited  pasturage.  Without  irrigation  they  were 
not  susceptible  of  cultivation  and  the  cost  of  se- 
curing water  for  that  purpose  was  prohibitive. 
Attracted  by  this  outcrop,  the  coal  company 
opened  a  mine  thereon  in  the  vicinity  of  these 
lands  in  1894.  In  the  beginning  the  output  of 
the  mine  was  small,  but  it  reached  183,750  tons 
for  1897,  259,608  tons  for  1898  and  441,227  tons 
for  1899. 

"An  attemj^t  was  made  by  the  coal  company 
to  acquire  a  part  of  the  lands  in  controversy  in 
1898  by  inducing  some  of  its  employees  and 
others  to  make  ordinary  homestead  entries  of 
them  under  an  agreement  whereby  the  company 
was  to  bear  the  expense,  compensate  the  entry- 
men  for  the  exercise  of  their  homestead  rights 
and  receive  the  title  when  perfected.     The  ar- 


74 

rangement  was  fraudulent  and  in  direct  viola- 
tion of  the  homestead  law,  independently  of  the 
character  of  the  lands.  26  Stat,  at  L.  1097, 
chapter  561  Sec.  5,  U.  S.  Comp.  Stat.  1901,  p. 
1388.  Sneddon  was  in  charge  of  the  attempt. 
He  was  acquainted  with  the  lands  and  all  their 
surroundings  and  was  well  informed  upon  the 
subject  of  coal  mining.  With  the  aid  of  a  sur- 
veyor he  identified  the  subdivisions  to  be  en- 
tered  and  afterwards  selected  the  men  who 
were  to  make  the  entries  and  directed  all  that 
was  done,  indicating  in  that  connection  that  the 
lands  were  coal  lands  and  were  to  be  taken  for 
that  reason,  and  also  to  prevent  another  coal 
concern  from  getting  them.  The  entries  were 
made  in  160-acre  tracts  and  to  give  them  appar- 
ent support  cheap  cabins  were  put  upon  the 
lands  at  the  company's  expense,  but  the  law  was 
not  even  colorably  complied  with  in  other  re- 
spects. The  next  year  this  plan  was  abandoned 
and  that  of  using  soldiers'  additional  rights  was 
adopted.  These  rights  were  assignable  and  in 
their  exercise  no  residence,  improvement  or  cul- 
tivation was  required.  See  Kev.  Stat.  Sec.  2306, 
U.  S.  Comp.  Stat.  1901,  p.  1415;  Webster  vs. 
Luther,  163  U.  S.  331,  41  L.  Ed.,  179,  16  Sup.  Ct. 
Rep.  963.  At  the  company's  request  the  prior 
entries  were  relinquished  and  the  entr\Tnen 
were  severally  paid  $500.00  for  what  they  had 
done,  the  pavment  to  one  being  $600.00.  When 
the  relinquishments  were  filed,  Sneddon  and 
Harrison  immediately  applied  to  enter  the  lands 
with  soldiqrs'  additional  rights.  A  few  of  the 
relinquished  subdivisions  were  not  re-entered 
and  several  tracts  not  covered  b}^  the  prior  en-, 
tries  were  included  in  the  new  ones,  but  all  of 
the  latter  were  made  with  soldiers'  additional 
rights  purchased  and  supplied  by  the  company 
and  were  made  for  its  benefit.  The  price  paid 
by  the  company  for  these  additional  rights  was 
from  $6.00  to  $13.00  an  acre.    After  the  entries 


75 

were  obtained  the  lands  were  conveyed  to  the 
company  and  Sneddon  was  paid  $1,000  for  this 
service/ although  otherwise  regularly  employed 
by  the  company  at  the  time. 

"In  1898,  shortly  before  the  dummy  entries 
were  made,  Sneddon  had  filed  in  the  land  office 
a  sworn  declaration  of  his  intention  to  purchase, 
under  the  coal-land  law  (Eev.  Stat.  Sees.  2347- 
49,  U.  S.  Comp.  Stat.  1901,  pp.  1440,  1441),  one 
of  the  tracts  in  controversy,  which  he  then  de- 
scribed as  containing  'a  valuable  vein  of  coal'. 
The  tract  was  about  a  quarter  of  a  mile  from  the 
outcrop.  At  the  time  of  making  the  soldiers' 
additional  entries  he  relinquished  the  coal  filing 
and  included  the  tract  in  two  of  them. 

"In  1899,  about  the  time  of  the  additional 
entries,  James  Lees  purchased  from  the  govern- 
ment, under  the  coal-land  law,  and  sold  to  the 
company  for  $3,400,  a  quarter  section  upon 
which  earlier  exploration  had  disclosed  good 
coal,  8  feet  in  thickness.  This  sale  was  in  execu- 
tion of  a  prior  arrangement  and  the  price  paid 
to  Lees  was  $200.00  in  excess  of  that  paid  to  the 
government.  The  tract  was  within  a  half  mile 
in  each  of  three  directions  from  lands  here  in 
controversy. 

"As  indicative  of  the  weight  and  importance 
which  men  having  a  practical  knowledge  of  coal 
mining  attached  to  the  outcrop  at  the  time,  the 
government  proved  by  an  experienced  mine  fore- 
man, who  had  been  in  charge  of  large  mines 
known  as  the  Cumberland  adjacent  to  a  portion 
of  the  lands  in  controversy,  that  those  mines 
were  opened  in  1900  by  reason  of  what  was 
found  on  the  outcrop ;  that  there  was  no  prece- 
dent drilling  of  the  adjacent  lands ;  and  that  in 
advising  the  opening  of  the  mines  he  was  guided 
by  what  an  examination  of  the  outcrop  in  1889 
disclosed.    True,  he  said,  that  he  could  not  take 


76 

'a  solemn  oatli'  or  'be  positive'  that  unexplored 
lands  in  the  vicinity  of  the  outcrop  and  in  the 
direction  of  the  dip  contained  valuable  coal,  but 
his  testunony  was  plainly  to  the  etfect  that  the 
outcrop,  the  direction  and  inclination  of  the  dip 
and  other  conditions  in  1899  and  1900  afforded 
reasonable  ground  for  believing  that  a  consider- 
able territory  lying  west  of  the  outcror>  could 
be  mined  profitably. 

"There  was  much  expert  testimony  by  geolo- 
gists concerning  the  outcrop  and  other  known 
geological  data  bearing  upon  the  character  of 
these  lands.  In  the  main  the  witnesses  were 
agreed  respecting  the  existence  of  these  physical 
indicia,  but  differed  as  to  the  conclusions  to  be 
drawn  from  them;  the  expert  for  the  govern- 
ment maintaining  that  they  afforded  convincing 
reasons  for  concluding  that  the  lands  were  coal 
lands  and  the  experts  for  the  coal  company  con- 
troverting that  view.  But  the  divergence  was 
not  so  pronounced  as  it  would  seem,  for  it  was 
partly  due  to  a  difference  as  to  what,  in  legal 
contemplation,  are  coal  lands. 

''The  expert  for  the  government  proceeded 
upon  the  theoi-y  that,  when  the  known  surround- 
ings are  such  tbat  practical  coal  men  would  in- 
vest in  particular  lands  for  coal  mining  or  ad- 
vise others  to  do  so,  those  lands  are  to  be  deemed 
coal  lands,  even  though  coal  has  not  as  yet 
actually  been  disclosed  within  their  limits.  And 
having  in  mind  the  outcropping  coal  bed,  the 
direction  and  inclination  of  its  dip,  the  char- 
acter of  the  rock  with  which  it  was  interstrati- 
fied.  the  quality  and  thickness  of  the  coal  at  the 
outcrop,  the  proximity  of  the  lands  to  the  out- 
crop and  the  topoQTaphical  and  structural  fea- 
tures of  the  vicinity,  he  crave  it  as  his  opinion 
that  the  coal  bed  extended  into  and  through  the 
lands  in  question  and  that  practical  coal  men 
would  regard  the  lands  as  valuable  for  coal  and 


77 

invest  iu  them  as  such.  He  accordingly  pro- 
nounced them  coal  lands  within  his  acceptation 
of  that  term.  This  conclusion  had  substantial 
support  not  only  in  the  facts  already  recited,  but 
also  in  the  fact  that  the  compam^'s  maps,  made 
three  years  before  the  suit  was  begun,  showed 
that  it  was  intended  to  project  its  mining  opera- 
tions westward  from  the  outcrop  a  mile  and  a 
half  and  had  designated  the  intervening  lands, 
which  included  some  of  those  in  controversv,  as 
coal  lands,  and  in  the  further  fact  that  the  com- 
pany had  returned  lands  extending  westward  a 
similar  distance,  likewise  including  some  now  in 
controversy,  as  exempt  from  direct  taxation  by 
reason  of  a  local  statute  substituting  an  output 
tax  upon  coal  mines.  Laws  AVyo.  1903,  chap.  81, 
p.  101.  The  return  for  the  year  in  which  the 
maps  were  made  claimed  an  exemption  of  sub- 
stantially six  sections  in  two  tiers  of  three  sec- 
tions each,  although  the  work  of  developing  the 
mine  (No.  4),  as  shown  by  the  maps,  was  still 
within  the  east  half  of  the  middle  section  in  the 
eastern  tier. 

"The  experts  for  the  coal  company  proceeded 
largely,  but  not  entirely^  upon  the  theory  that 
lands  cannot  be  regarded  as  coal  lands  unless 
coal  in  quantity  and  of  quality  to  render  its  ex- 
traction profitable  is  actually  disclosed  within 
their  boundaries.  One  testified  that,  even  if  a 
slope  were  driven  from  the  outcrop  to  within 
five  feet  of  the  vertical  boimdary  of  one  of  the 
sections  in  question  and  in  good  coal  all  the  way 
(a  fact  proved  but  not  to  be  considered  here  be- 
cause in  the  nature  of  a  discovery  subsequent  to 
the  entries),  it  would  not  show  that  the  section 
approached  was  coal  land,  there  being  no  actual 
exposure  of  coal  within  its  limits.  And  he  added 
that  it  would  be  the  same  if  the  distance  were  3 
inches  instead  of  5  feet,  but  that  'the  moment 
you  cross  the  line,  then  it  commences  to  be  coal 


78 

land'.  Special  emphasis  was  laid  upon  tlie  un- 
certainties incident  to  coal  mining  in  the  cre- 
taceous areas  of  the  West  by  reason  of  the  oc- 
currence of  faults,  wants,  thinning  and  the  like ; 
and  this,  it  was  said,  required  that  actual  ex- 
posure of  coal  within  the  land,  by  an  outcrop- 
ping at  the  surface  or  an  excavation,  be  ac- 
cepted as  the  true  and  only  test.  But  even  such 
a  test  was  largely  discredited  by  statements  that 
'a  good  outcrop  at  the  surface  may  represent  a 
want  below  or  a  want  at  the  surface  may  repre- 
sent a  coal  below',  and  that  in  following  a  good 
discovery  a  fault  or  thinning,  as  well  as  a  want, 
may  be  encountered  at  any  moment.  It  was 
conceded,  however,  that  the  coal  horizon — mean- 
ing the  coal-bearing  strata  shown  at  the  out- 
crop, but  not  necessarily  the  coal — passed 
through  the  lands  m  controversy  and  one  ex- 
pert, while  declaring  that  he  could  not  make  an 
affidavit  that  they  were  coal  lands  in  the  sense 
of  'strictly  containing  deposits  of  coal',  candidly 
added:  'But  I  would  be  prepared  to  make  an 
affidavit  that  I  believe  them  to  contain  coal'. 
Another,  although  pronouncing  the  showing  at 
the  outcrop  and  elsewhere  insufficient  to  render 
the  lands  valuable  for  coal  mining,  said:  'I  am 
not  prepared  personally,  to  either  affirm  or 
deny  that  this  land  does  or  does  not  contain  coal. 
I  contend  that  it  is  beyond  the  capacity  of  any 
man  to  sa}^  that  something  exists  or  does  not 
exist  upon  which  he  has  no  absolute  testimony'. 

"It  is  of  some  significance  that  Sneddon — 
who  had  long  been  in  the  company's  service,  had 
been  the  central  figure  in  the  acquisition  of 
these  lands,  was  familiar  with  them  and  the  pur- 
pose for  which  they  were  sought  and  acquii'ed, 
was  the  company's  superintendent  when  tlie 
evidence  was  taken  before  the  master  and  was 
present  during-  a  part,  at  least,  of  the  time  when 
it  was  being  taken — was  not  called  by  the  com- 


79 

pany  as  a  witness  and  that  statements,  declara- 
tions and  acts  attributed  to  him  and  which  made 
against  the  company  were  permitted  to  go  un- 
denied  and  unexplained. 

"We  think  the  evidence,  rightly  considered, 
shows  w^ith  the  requisite  certainty  that  at  the 
time  of  the  proceedings  in  the  land  office  the 
lands  were  known  to  be  valuable  for  coal.  Other- 
wise they  had  only  a  nominal  value,  not  to  ex- 
ceed $1.25  an  acre!^  and  yet  easily  ten  times  that 
amount  was  voluntarily  expended  by  the  com- 
pany in  acquiring  them.  It  was  hardly  intend- 
ing "to  make  an  aimless  or  grossly  excessive  ex- 
penditure. It  was  a  practical  concern,  operated 
by  practical  men.  It  had  located  a  mine  upon 
the  outcrop  five  years  before  and  in  the  mean- 
time had  proved  the  wisdom  of  the  undertak- 
ing by  its  mining  operations.  They  had  dis- 
closed the  existence  of  an  extensive  bed  of  valu- 
able coal  dipping  to  the  west  under  the  valley 
and  in  that  way  had  supplemented  the  evidence 
afforded  by  the  outcrop  and  its  surroundings. 
Without  any  doubt  these  considerations  induced 
the  company  to  believe,  and  rightly  so,  that  the 
lands  in  controversy  possessed  a  value  for  coal 
mining  greatly  in  excess  of  their  value  for  any 
other  purpose.  This  explains  the  expenditure 
and  the  persistency  of  the  company's  efforts  to 
acquire  them ;  and  the  fact  that  the  earlier  effort 
was  obviously  fraudulent  and  unlawful,  inde- 
pendently of  the  character  of  the  lands,  serves 
in  no  small  degree  to  explain  the  kindred  prac- 
tices employed  in  the  later  effort.  In  short,  the 
company,  without  care  as  to  the  means,  sought 
and  acquired  the  lands  because  it  regarded  them 
as  valuable  for  coal.  Its  view  and  purpose  were 
also  reflected  by  its  maps  and  tax  returns.  Of 
course,  it  was  not  a  bona  fide  purchaser  from 
Sneddon  and  Harrison,  for  they  were  mere 
agents  representing  it  as  an  undisclosed  princi- 
pal. 


80 

"An  exposure  to  tlie  eye  of  coal  upon  tlie  par- 
ticular lands  was  not  essential  to  give  them  a 
then  present  value  for  coal  mining.  They  were 
all  adjacent  to  the  outcrop  and  above  the  plane 
of  the  coal-bearing  strata  dipping  under  the 
valley.  In  alternate  even-numbered  sections 
they  substantially  paralleled  the  outcrop  for 
seven  miles  and  in  two  places  were  separated 
from  it  bv  onlv  a  few  rods.  Those  to  the  north 
were  opposite  the  company's  developed  mine 
(No.  4)  and  those  to  the  south  were  opposite  the 
tract  acquired  through  Lees,  upon  which  good 
coal  was  disclosed.  The  outcrop,  the  disclosures 
in  the  vicinity  and  the  geological  formation 
pointed  with  convincing  force  to  a  workable 
bed  of  merchantable  coal  extending  under  the 
valley  and  penetrating  these  lands.  These  con- 
ditions were  open  to  common  observation  and 
were  such  as  would  appeal  to  practical  men  and 
be  relied  upon  by  them  in  making  investments 
for  coal  mining.  They  did  so  appeal  to  the 
Cumberland  people,  as  well  as  this  company, 
both  large  concerns  represented  by  men  of  ex- 
perience, understanding  the  uncertainties  and 
hazards  of  the  business  as  well  as  its  rewards. 
No  doubt  it  has  its  uncertainties  and  hazards, 
but  the  evidence  shows  that  the}'  are  not  so  pro- 
nounced as  indicated  by  the  company's  experts 


?7 


The  court  takes  full  notice  of  "the  respect  due  to 
a  patent"  and  the  other  usual  arguments  based  on 
the  solemn  character  of  such  an  instrument  and 
thereupon  lays  down  the  following  rule : 

"To  justify  the  annulment  of  a  homestead 
patent  as  tvrongfiilly  eovering  mineral  land,  it 
must  appear  that  at  the  time  of  the  proceedings 
which  resulted  in  the  patent  the  land  was  known 
to  he  valuable  for  mineral:  that  is  to  say,  it  must 
appear  that  the  known  conditions  at  the  time  of 


81 

these  proceedings  tvere  plainly  such  as  to  en^ 
gender  the  belief  that  the  land  contained  mineral 
deposits  of  such  quality  and  in  such  quantity 
as  tvould  render  their  extraction  profitahle  and 
justify  expenditure  to  that  end." 

The  most  casual  reading  of  the  quoted  language 
will  disclose  that  the  court  was  laying  down  a  rule 
or  formula  for  the  determination  of  what  is  knotvn 
mineral  land  and  the  language  employed,  as  well  as 
the  context  and  the  facts,  indicates  very  clearly  that, 
while  the  coal  company  insisted  that  an  actual  ex- 
posure of  coal  on  each  unit  of  the  lands  in  suit  or  the 
development  of  the  land  by  the  ''work  of  man" 
eventuating  in  the  disclosure  of  the  presence  of  coal 
in  commercial  quantity  and  of  commercial  quality 
were  necessary  to  place  the  lands  in  the  category  of 
known  mineral  lands,  the  court  repudiated  that  con- 
tention and  held  that,  where  there  is  absolutely 
neither  natural  exposure  nor  development,  lands  are 
mineral  lands  when  the  known  conditions  are  plainly 
such  as  to  engender  the  belief  that  they  contain  min- 
erals quantitatively  and  qualitatively  commercial. 

Appellants  assert  and  contend  that  the  instant  case 
is  not  within  the  principle  upon  which  the  Diamond 
Coal  &  Coke  Company  case  was  decided;  while  the 
government  confidently  maintains  that  it  is.  In  the 
closing  paragraph  of  the  opinion  Mr.  Justice  Van 
Devanter  says:  "Neither  are  we  considering  other 
minerals  whose  mode  of  deposition  and  situation  in 
the  earth  are  so  irregular  or  otherwise  unlike  coal  as 
to  require  that  they  be  dealt  with  along  other  lines." 


82 

The  government  asserts  that  upon  this  record  oil  is 
shown  to  be  in  the  same  class  with  coal  with  respect 
to  "mode  of  deposition  and  situation  in  the  earth" 
and  that  in  all  respects  the  two  minerals  are  so  simi- 
lar as  to  be  dealt  with  along  the  same  lines.     As 
already  indicated,  if  the  rule  is  not  applicable  to  oil, 
it  is  restricted  solely  to  coal — and  the  language  of 
the  opinion  is  plainly  such  as  to  indicate  that  the 
court  intended  no  such   limitation.     The   standard 
laid  down  is  not  expressly  restricted  to  coal,  but  im- 
pliedly extends  to  other  minerals,  while  only  those 
are  excluded  whose  "mode  of  deposition  and  situa- 
tion in  the  earth  are  so  irregular  or  otherwise  unlike 
coal  as  to  require  that  they  be  dealt  with  along  other 
lines".    If  oil  is  not  within  the  rule,  then,  manifestly, 
the  rule,  contrary  to  the  implication,  is  restricted  to 
coal.    The  immediate  purpose  of  this  introduction  is 
to  show  by  the  record  the  striking  similarity  in  the 
"mode  of  deposition  and  situation  in  the  earth"  of 
the  two  minerals,  coal  and  oil ;  and  in  this  connection 
reference  will  be  had  principally  to  the  testunony  of 
two  eminent  geologists.  Dr.  John  Casper  Branner, 
President  Emeritus  of  Leland   Stanford  Jr.   Uni- 
versity, and  A.  C  Yeatch,  although  that  of  others 
will  be  alluded  to. 

In  1897  Mr.  Veatch  was  connected  with  the  Indi- 
ana University  Geological  Survey  in  charge  of  a 
section  doing  field  work  in  Indiana.  In  1898  he  was 
a  member  of  Cornell  University  Geological  Survey 
working  on  the  coastal  plains  from  New  Jersey  to 
Mississippi.  From  1898  to  1900  he  was  assistant 
State  geologist  of  Louisiana  and  in  1901  was  assist- 


83 

ant  in  charge  of  areal  and  stratigraphic  geology  in 
Cornell  University  summer  school  of  field  geology. 
In  1901  and  1902  he  was  geologist  of  the  Houston 
Oil  Company  working  in  the  Louisiana  and  Texas 
oil  fields.  In  1902  he  became  professor  of  geology  in 
the  State  University  of  Louisiana  and  State  Geolo- 
gist, resigning  these  positions  to  accept  a  position 
with  the  United  States  Geological  Survey  with 
which  he  w^as  connected  from  December,  1902,  to 
1910.  In  1910  and  1911  he  was  engaged  in  work  in 
the  Trinidad  and  Venezuela  oil  fields  and  after  his 
resignation  from  the  Survey  was  engaged  as  a 
consulting  geologist.  While  with  the  United  States 
Geological  Survey  he  was  chairman  both  of  the  coal 
land  classification  board  and  the  oil  land  classifica- 
tion board.  In  1907  he  had  been  appointed  by  the 
President  of  the  United  States  a  special  commis- 
sioner to  investigate  the  mining  laws  of  Australia 
and  New  Zealand  (E.  687-8). 

Mr.  Veatch  w^as  "the  expert  for  the  government" 
referred  to  by  Mr.  Justice  Van  Devanter  in  the  Dia- 
mond Coal  &  Coke  Company  case.  While  in  that 
case  there  was  much  expert  testimony  concerning  a 
distant  outcrop  of  coal  and  other  geological  data  con- 
cerning adjoining  and  surrounding  lands  bearing  on 
the  character  of  the  lands  there  in  suit  and  while 
there  was  little  disagreement  respecting  the  existence 
of  such  physical  indicia,  the  experts  for  the  coal  com- 
pany and  the  expert  for  the  government  differed 
as  to  the  conclusions  to  be  drawn  from  them.  The 
main  attack  of  the  coal  company's  experts  was  cen- 


84 

tered  upon  Yeateh's  defiuition  of  what  constituted 
coal  land.  The  Supreme  Court  disregarded  the  testi- 
mony of  the  coal  company's  experts  and  adopted  and 
wrote  into  its  decision  his  definition. 

Upon  the  subject  in  hand  Mr.  Yeatch  testified  in 
substance  as  follows: 

Where  minerals  occur  in  stratified  beds,  it  is  fre- 
quently possible  to  determine  with  exactness  their 
extent  and  value  and  other  factors  important  in  their 
appraisement  and  development.  Stratified  rocks  are 
laid  down  in  relatively  regular  layers,  for  the  most 
part  beneath  the  sea,  and  are  in  contrast  with  other 
rocks  formed  by  igneous  intrusions  or  volcanic  out- 
pourings or  which  have  been  so  attended  by  meta- 
morphic  action  as  to  lose  their  former  characteristics. 
The  individual  layers  of  stratified  deposits  can  be 
traced  for  many  miles,  showing  to  a  great  extent  the 
same  characteristics;  and  it  is  on  this  regularity  or 
irregularity,  as  shown  by  the  outcrop,  that  practical 
men  base  their  conclusions  and  have  spent  great 
sums  of  money  in  developing  minerals  of  the  kind 
which  occur  in  stratified  deposits,  among  the  most 
important  of  which  are  coal,  oil,  water  and  the  phos- 
phates. These  differ  widety  in  their  mode  of  occur- 
rence from  most  deposits  of  ores  and  entirely 
from  veins  or  lodes,  which  are  of  very  irregular 
character.  It  is  on  the  exposure  of  stratified  rocks 
containing  coal,  oil,  water  and  the  phosphates  caused 
by  uplifting,  folding  and  erosion  that  the  geologist 
bases  his  conclusions.  The  beds,  after  deposition, 
are  folded  up  and  eroded  and  the  effect  is  to  enable 


85 

the  geologist  to  examine  the  character  of  the  rocks  as 
fully  and  carefully  as  he  could  in  an  enormous  trench 
dug  through  the  surface  of  the  earth.  Extending 
for  many  miles  it  forms  a  much  sounder  basis  for 
judgment  than  a  single  development.  (E.  696-7.) 

Both  coal  and  oil  occur  in  stratified  deposits  and 
are  subject  to  much  the  same  laws.  In  the  case  of 
a  coal  deposit,  where  erosion  has  entirely  removed 
the  strata  around  a  given  area,  that  area  rises  as  a 
hill  above  the  surrounding  area.  If  in  such  a  case 
you  find  the  coal  outcropping  on  one  side  of  the  hill 
and  vou  follow  the  coal  bed  around  the  hill,  as  you 
can  by  natural  exposures,  and  find  that  it  goes  en- 
tirely around  the  hill,  you  know  absolutely  that  the 
coal  underlies  the  hill  and  are  justified  in  buying 
that  land  as  coal  land  in  the  absence  of  any  develop- 
ment. In  a  similar  way,  if  you  find  a  coal  bed  ex- 
posed on  the  side  of  a  valley  and  follow  the  bed 
around  the  valley,  you  know  that  the  valley  is  under- 
laid with  coal;  and  by  the  rate  of  slope  of  the  beds 
you  can  calculate  the  depth  of  that  coal  bed  in  that 
area  which  is  underlaid  with  it.     (E.  698.) 

In  the  case  of  oil  or  water  you  can  follow  the  sand 
bed  or  other  porous  bed  suitable  for  containing  them 
in  exactly  the  same  way  in  which  you  follow  a  coal 
bed.  You  can  determine  the  existence  of  that  porous 
stratum  in  the  same  wav  in  which  vou  can  determine 
the  existence  of  the  layer  of  coal  and  in  a  similar 
way  you  can  calculate  the  thickness  of  the  depth  of 
that  porous  bed  under  different  portions  of  the  terri- 
tory.   You  follow  the  same  method.  (E.  698.) 


86 

The  presence  of  oil  or  water  in  the  porous  bed  can 
be  indicated  either  by  springs  along  the  outcrop  in 
the  case  of  water  or  seepages  in  the  case  of  oil  or, 
failing  these,  their  presence  may  be  demonstrated  by 
a  well  or  group  of  wells.  Such  a  well  or  group  of 
wells  or  such  seepages,  taken  in  connection  with  the 
detenninal  persistence  of  these  beds  and  the  geo- 
logical structure,  warrants  the  development  of  terri- 
tory in  which  you  have  not  drilled.  It  shows  the 
presence  under  the  lands  of  the  substance  desired. 
(R.  698-9.) 

The  oil  value  of  land  may  be  demonstrated  in  the 
same  way  in  which  coal  can  be  demonstrated  by  the 
outcrop.  The  principle  is  the  same  in  every  way. 
It  has  frequently  been  demonstrated  in  advance  of 
drilling  (R.  700-1). 

With  specific  reference  to  the  lands  in  suit  Mr. 
Veatch,  after  mentioning  the  long  line  of  seepages 
along  the  east  flank  of  the  Temblor  Range  in  the 
vicinity  of  the  lands  in  suit  and  the  great  series  of 
wells  which  had  been  sunk  prior  to  the  patent  down 
the  dip  from  these  seepages  showing  that  the  seep- 
ages represented  oil  in  commercial  quantities  (R. 
701-2)  and  after  stating  that  the  strata  dipped  from 
the  direction  of  these  seepages  and  wells  towards  the 
Elk  Hills,  the  locality  of  the  lands  in  suit,  and  that 
the  Elk  Hills  are  within  the  proven  area  from  geo- 
logical deductions,  testified  in  substance  as  follows: 

The  determination  of  the  oil  value  of  the  lands  in 
the  Elk  Hills  is  predicated  on  the  seepages  which 


87 

occur  along  the  flank  of  the  Temblor  Range.  They 
prove  the  extent  of  the  oil  impregnated  zone  and  in 
that  way  demonstrate  the  oil  value  of  the  Elk  Hills 
(R.  704). 

Dr.  J.  C.  Branner,  whose  qualifications  are  set  out 
somewhat  in  detail  on  pages  1000  and  1001  of  the 
record,  may,  without  disparagement  of  others,  be 
described  as  the  most  eminent  oil  geologist  on  the 
Pacific  Coast.  He  has  had  wide  experience  in  the 
oil  fields  of  California,  has  visited  and  examined 
many  of  them,  including  the  lands  in  suit  and  others 
in  the  neighborhood.  His  character  is  so  exalted  and 
his  attainments  so  conspicuous  that  counsel  for  ap- 
pellants admitted  that  he  was  not  "open  to  impeach- 
ment" (R.  1992).  At  the  time  of  testifying  he  was 
professor  of  geology  in  Stanford  University  and 
subsequently  became  its  honored  president.  Dr. 
-Branner's  testimony  in  this  case  is  best  read  as  a 
whole.  A  mere  reference  to  that  part  of  it  bearing 
upon  the  question  instantly  under  discussion  is  here 
attempted : 

After  detailing  somewhat  the  presence  and  condi- 
tions of  seepages  and  wells  along  the  east  flank  of 
the  Temblor  Range,  the  presence  of  immense  thick- 
nesses of  Monterey  shales,  the  recognized  and  ad- 
mitted source  of  oil  in  that  region,  the  geologic 
conditions  consisting,  among  other  things,  of  the  dip 
of  the  strata  from  the  seepages  and  wells  in  the 
direction  of  the  Elk  Hills,  Dr.  Branner  stated  that, 
although  at  the  time  to  which  his  testimony  related 
there  was  absolutely  no  development  in  the  Elk  Hills, 


88 


''the  geological  structure  was  perfectly  clear"  (R. 
1002),  and  his  opinion  was  that  the  "Elk  Hills  was 
the  most  promising  area  for  petroleum  in  that  region 
in  the  vicinity  of  McKittrick"  and  that  they  were 
"oil-bearing"  (R.  1003).  His  conclusion  was  the 
result  of  geologic  deduction  and  he  said: 

"I  should  say  that,  if  am^  competent  geologist, 
observing  the  natural  waste  of  oil  about  Mc- 
Kittrick and  the  stage  of  development  in  1900 
or  a  year  or  two  subsequent  and  visiting  the  Elk 
Hills  and  making  some  examination  of  the  struc- 
tural formation,  failed  to  form  an  opinion  that 
the  Elk  Hills  were  oil  in  character  and  that  there 
was  an  oil  bearing  zone  underneath  those  hills, 
he  did  not  understand  his  business"  (R.  1004). 

Dr.  Branner  stated  that,  taking  into  consideration 
the  developments  that  had  been  accomplished  off  the 
lands  in  suit  in  1904  and  the  geologic  structure 
of  the  region,  he  would  in  1904  have  advised  the  pur- 
chase of  these  lands  for  their  oil  value  at  a  price  in 
excess  of  their  value  for  agriculture  (R.  1005).  He 
also  testified  that  practical  men  invest  money  in  oil 
territory  in  advance  of  drilling  on  the  advice  of 
geologists  and  he  regarded  that  practice  as  fully 
justified  by  the  results  (R.  1006). 

With  reference  to  the  "risk"  in  petroleum  mining 
as  compared  with  the  mining  of  the  precious  metals 
he  testified  in  substance  as  follows : 

"I  am  familiar  with  the  methods  of  quartz 
and  gold  mining  and  with  petroleum  mining  and 
consider  that,  so  far  as  metal  mining  is  con- 
cerned, the  finding  of  traces  of  gold  or  silver  on 


89 

the  surface  of  a  ledge  or  lode  does  not  amount 
to  anything  more  than  the  merest  suggestion, 
whereas  in  the  case  of  the  Elk  Hills  I  consider 
that  the  evidence  makes  it  worth  going  ahead 
without  any  other  evidence  than  the  geology 
itself  and  disregarding  any  drilling  or  actual 
development  in  the  hills  themselves.  That  evi- 
dence existed  as  early  as  1900."     (R.  1023.) 

Dr.  Branner  also  testified  that  there  is  no  such 
uncertainty  in  petroleum  mining  as  in  quartz  mining 
and  that,  next  to  coal  mining,  the  mining  of  petro- 
leum, based  solely  on  geologic  evidence,  is  the  surest 
kind  of  mining  (R.  1024). 

These  views  find  ample  support  in  the  testimony 
of  other  witnesses  and  brief  references  to  that  of 
Frank  Barrett,  W.  E.  Youle,  John  R.  Scupham, 
F.  O.  Martin  and  J.  A.  Taff  follow : 

Captain  Frank  Barrett  when  on  the  stand  was 
sixty-seven  years  old  and  had  been  in  the  oil  business 
practically  his  entire  life,  having  operated  in  Penn- 
sylvania, West  Virginia,  Kentucky,  Ohio,  Texas, 
Indiana  and  California.  He  brought  in  the  first  pay- 
ing well  in  the  Coalinga  field,  having  come  to  Cali- 
fornia about  1885  (R.  478).  He  stated  that  he  had 
found,  to  his  sorrow,  that  placer  and  gold  mining 
were  much  more  uncertain  than  the  oil  business  and 
denied  on  cross-examination  that  a  practical  oil 
driller  has  just  as  much  chance  to  tell  where  oil  is 
as  a  scientific  geologist,  stating  that  a  good  practical 
driller  may  not  know  exactly  where  to  locate  his 
well,  while  a  man  who  understands  the  formation 


90 

and  the  topography  of  the  country  will  locate  the 
well  and  turn  it  over  to  the  driller  (E.  486). 

W.  E.  Youle,  whose  qualifications  as  an  expert  are 
set  out  on  pages  540,  541,  542,  543  and  544  of  the 
record,  had  been  in  the  oil  business  fiftv  vears, 
having  begun  in  Pennsylvania  in  1863.  He  had  had 
wide  experience  in  California,  having  discovered  and 
exploited  many  of  the  now  important  fields,  and  had 
had  phenomenal  success  in  determining  the  presence 
of  oil.  Upon  this  record  he  stands  out  par  excellence 
as  combining  in  conspicuous  measure  knowledge  of 
oil  both  scientific  and  practical.  He  had  not,  in  his 
experience  of  fifty  years,  failed  in  a  single  instance 
to  find  oil  sand  in  any  place  in  which,  before  drilling, 
he  had  thought  that  he  would  find  it  (R.  567)  ;  and 
the  context  shows  that  he  based  his  "thought  that  he 
would  find  it"  on  geologic  evidence.  Especially 
pertinent  to  the  question  under  immediate  review  is 
his  testimonv  that,  while  the  discoverv  of  oil  in  one 
section  does  not  indicate  to  a  practical  oil  man  that 
oil  will  be  found  in  ever}-  other  section  in  the  town- 
ship, experience  has  shown  that  oil  is  not  confined  to 
the  well  in  which  it  is  found,  but  that  it  "has  a  direc- 
tion somewhere"  and  that,  in  consequence  of  that 
fact,  after  a  discovery  you  will  find  oil  men  locating 
and  acquiring  lands  quite  distant  from  the  discovery 
well  (E.  579).  He  further  stated  that  many  years 
before  he  had  seen  the  uplift  and  fold  in  the  Elk 
Hills  and  because  of  these  surface  conditions  had 
advised  the  location  of  several  sections  (E.  579). 


91 

In  speaking,  as  indicated,  of  "the  direction"  of  oil 
it  is  clear  that  Youle  referred  to  the  sand  which  is 
the  reservoir  of  the  oil;  and  the  fact  that  oil  men 
locate  land  at  a  distance  from  new  wells  is  a  recogni- 
tion by  them  of  the  persistence  of  the  sand  and  of  the 
fact  that  by  determining  its  dip  and  direction  it  is 
possible  to  trace  the  oil  sand  underground  and  locate 
producing  wells  at  a  distance  upon  the  basis  of  these 
known  conditions,  the  presence  of  oil  at  a  given  place 
and  the  direction  and  dip  of  the  containing  stratmn 
of  sand — being  the  identical  principle  upon  which  it 
is  held  in  the  Diamond  Coal  &  Coke  Company  case 
that  lands  may  in  advance  of  actual  development  be 
determined  to  be  coal  lands. 

John  Scupham  had  entered  the  service  of  the  Cen- 
tral Pacific  Railroad  Compan}^  in  1865  as  a  civil  en- 
gineer. In  1871  he  was  recalled  from  field  work  and 
was  made  consulting  engineer  reporting  to  the  direc- 
tors Leland  Stanford,  Charles  Crocker,  Mark  Hop- 
kins, C.  P.  Huntington  and  their  successors.  He 
came  into  contact  frequently  with  these  directors 
and,  among  other  things,  examined  mineral  lands  for 
them.  Upon  his  advice  various  coal  properties  had 
been  acquired.  He  did  pioneer  meteorological  work 
and  reported  on  artesian  water  projects  in  the  San 
Joaquin  valley  and  sank  the  first  successful  artesian 
well  (R.  586).  In  1887  A.  N.  Towne,  general  mana- 
ger of  the  Southern  Pacific  Railroad  Company,  sent 
him  to  make  an  examination  of  the  asphalt  deposits 
around  McKittrick.  AYhat  he  found  and  the  results 
of  his  report  are  told  elsewhere  in  this  brief.    Suffice 


92 

it  to  say  that  lie  came  to  the  conclusion  at  that  time 
that  the  lands  in  suit  were  oil  lands  and  so  advised 
the  directors  of  the  railroad  (K.  588). 

With  particular  reference  to  the  striking  similar- 
ity between  coal  and  oil  mining  Scupham,  who 
had  had  wide  experience  in  both,  testified  that  there 
is  a  relation  between  the  means  by  wdiich  one  deter- 
mines the  depth  of  artesian  basins  and  coal  measures 
and  that  of  oil  measures  or  oil  sands  based  upon  the 
controlling  principle  of  the  stratification,  that  is,  the 
direction  and  dip  of  the  strata  (R.  599). 

J.  A.  Taff  was  a  geologist  in  the  employ  of  appel- 
lants w^ho  testified  as  a  witness  for  them.  He  had 
been  on  the  United  States  Geological  Survey  and 
had  had  experience  in  classifying  coal  lands.  He  ad- 
mitted that  it  is  possible  and  usual  to  do  this  in 
advance  of  development.  He  testified  that  in  geo- 
logical examinations  the  succession  of  the  beds  and 
the  extent  to  which  oil  is  likely  to  occur  are  deter- 
mined in  the  same  way  in  which  is  determined  the 
extent  of  coal  beds  (R.  2768). 

F.  O.  Martin,  an  expert  mineralogist  and  geologist 
(R.  609),  testified  in  effect  that  oil  mining  is  much 
less  uncertain  than  lode  mining  (R.  617-8)  and  that 
the  conditions  of  the  accumulation  of  oil  and  the 
appearance  of  valuable  metals  such  as  gold  are  quite 
dissimilar,  the  conditions  favoring  oil  (R.  619). 

It  is  practically  without  dispute  upon  the  record 
and  it  appears  from  the  foregoing  testimony  that  oil, 


)3 


like  coal,  occurs  in  stratified  sedimentary  rocks ;  that 
oil  sands,  like  coal,  are,  within  reasonable  limitations, 
persistent;  and  that  oil,  in  its  mode  of  deposition 
and  situation  in  the  earth,  is  like  coal  and  unlike 
minerals  found  in  lodes. 

To  be  sure,  there  is  testimony  on  the  part,  princi- 
pally, of  interested  Southern  Pacific  Company  geolo- 
gists to  the  effect  that  oil  sands,  meeting  obstructions, 
are  interrupted;  that  at  tunes  and  in  places  they 
"thin"  or  are  "pinched  out";  and  it  is  urged  that  by 
reason  thereof  the  principle  of  the  Diamond  Coal  & 
Coke  Company  case  is  not  applicable  to  the  determi- 
nation of  what  lands  are  "known  oil  lands".  It  is 
sufficient  at  this  point  to  answer  that  these  conten- 
tions lack  novelty — they  are  the  identical  contentions 
advanced  by  the  defendant  in  the  case  in  question 
and  are  noted  and  conclusivel}^  disposed  of  by  the 
opinion  of  the  Supreme  Court,  while  in  the  circuit 
court  of  appeals  it  is  said  that,  as  urged,  they  amount 
to  "a  condemnation  in  general  of  the  practical  value 
of  the  coal  beds  of  the  west". 

That  lands  may  in  advance  of  development  be 
determined  to  be  known  oil  lands  upon  the  same 
basis  as  that  laid  down  in  the  Diamond  Coal  and 
Coke  case  is  not  without  legislative  recognition  and 
sanction.  On  July  2,  1864,  the  government  made  to 
the  Northern  Pacific  Railroad  Company  a  grant  of 
land  similar  in  all  essential  respects  to  the  grant 
under  which  appellants  claim.  By  an  act  approved 
February  26,  1895,  Congress  provided  for  an  exam- 


94 

ination  and  classification  of  the  lands  within  the  pri- 
mary indemnity  limits  of  the  Northern  Pacific  grant 
with  reference  to  their  mineral  character  and  therein 
made  a  legislative  declaration  of  what  evidence  is 
competent  and  proper  to  determine  the  character  of 
such  lands.  That  declaration,  made,  as  is  seen,  nine 
years  before  the  selection  by  the  Southern  Pacific 
Eailroad  Company  of  the  lands  in  suit,  recognizes 
clearly  the  propriety  and  practicability  of  determin- 
ing by  geologic  evidence  what  are  knoAvn  oil  lands. 
The  pertinent  section  of  the  act  in  question  follows : 

"Section  3.  That  all  said  lands  shall  be 
classified  as  mineral  which  by  reason  of  valuable 
mineral  deposits  are  open  to  exploration,  occu- 
pation and  purchase  under  the  provisions  of  the 
United  States  mining  laws;  and  the  commis- 
sioners, in  making  the  classification  hereinafter 
provided  for,  shall  take  into  consideration  the 
mineral  discovered  or  developed  on  or  adjacent 
to  such  land  and  the  geological  formation  of  all 
lands  to  be  examined  and  classified  or  the  lands 
adjacent  thereto  and  the  reasonable  probabili- 
ties of  such  land  containing  valuable  mineral 
deposits  because  of  its  said  formation,  location 
or  character.  The  classification  herein  provided 
for  shall  be  by  each  legal  subdivision,  where  the 
lands  have  been  surveyed.  If  the  lands  examined 
are  not  surveyed,  classification  shall  be  made  by 
tracts  of  such  extent  and  designated  by  such 
natural  or  artificial  boundaries  to  identify  them 
as  the  coimnissioners  may  determine.  Where 
mining  locations  have  been  heretofore  made  or 
patents  issued  for  mining  ground  in  any  section 
of  land,  this  sliall  be  taken  as  prima  facie  evi- 
dence that  the  forty-acre  subdivision  within 
which  it  is  located  is  mineral  land.  Provided, 
that  the  word  'mineral'  where  it  appears  in  this 


95 

act,  shall  not  be  held  to  include  iron  or  coal ;  and 
provided,  further,  that  the  examination  and 
classification  of  lands  hereby  authorized  shall  be 
made  without  reference  or  regard  to  any  pre- 
vious examination  or  report  or  classification 
thereof."    (28  Stat,  at  L.  683.) 

In  the  Diamond  Coal  and  Coke  Company  case  the 
contention  was  that  the  drill  was  the  onlv  test  of  the 
coal  character  of  land.  Indeed,  this  is  an  under- 
statement of  the  contention  there  urged,  as  appears 
from  the  opinion  of  the  Supreme  Court  and  particu- 
larl}^  that  of  the  circuit  court  of  appeals.  In  the 
former  is  found  this  passage : 


a 


Special  emphasis  was  laid  upon  the  uncer- 
tainties incident  to  coal  mining  in  the  cretaceous 
areas  of  the  West  by  reason  of  the  occurrence  of 
faults,  thinning  and  the  like;  and  this,  it  was 
said,  required  that  actual  exposure  of  coal 
within  the  land,  by  an  outcropping  at  the  sur- 
face or  an  excavation,  be  accepted  as  the  true 
and  only  test." 

In  the  circuit   court  of  appeals  the   opinion   of 
Judge  Hook  contains  the  following  language: 

"The  defendant  gives  a  number  of  reasons 
for  its  position  that  the  lands  in  suit  are  not  cojil 
lands.  It  says,  which  is  true,  there  is  no  evi- 
dence upon  their  surface  of  coal  content.  The 
long  line  of  outcrop  lies  to  the  eastward.  It  also 
says  that  the  only  way  to  determine  with  the 
certainty  required  by  law  is  to  explore  with 
a  drill ;  and  that  has  not  been  done.  One  of  de- 
fendant's  principal  witnesses  testified  that,  in 
the  absence  of  an  actual  outcrop  of  coal,  a  tract 
of  land  should  be  laid  out  in  thousand  foot 
squares  and  a  hole  drilled  with  a  diamond  drill 


9() 

to  the  requisite  depth  at  each  corner.  He  also 
said  that  in  the  case  here  the  cost  would  be  pro- 
hibitive. His  contention  was,  and  it  is  substan- 
tially that  of  defendant,  that  land  could  not  be 
regarded  as  coal  land  unless  coal  is  actualh^  ex- 
posed naturally  or  artificially;  in  other  words, 
at  the  time  it  is  acquired  from  the  United  States 
there  must  be  either  a  natural  outcrop  or  an 
actual  disclosure  by  the  work  of  man;  visible 
evidences  of  coal  veins  upon  adjacent  lands  and 
geological  probabilities,  however  strong,  as  to 
the  lands  in  question,  will  not  suffice."  (191 
Fed.  786,  794.) 

So,  in  the  instant  case  the  contention  is  that  the 
drill  is  the  only  test,  this  requirement  being  urged 
in  several  forms  and  clothed  in  various  language. 
On  the  argument  below  "wells  in  the  plural"  was 
the  formula ;  and  at  all  times  it  has  been  vehemently 
proclaimed  that  nothing  short  of  absolute  "knowl- 
edge" of  the  presence  upon  the  identical  lands  in 
suit  of  oil  of  present  commercial  quantity  and 
quality  will  suffice  to  remove  them  from  the  category 
of  agricultural  non-mineral  lands.  In  the  Diamond 
Coal  &  Coke  Company  case  both  the  Supreme 
Court  and  the  Circuit  Court  of  Appeals  for  the 
Eighth  Circuit  repudiated  this  doctrine  and  held 
that  lands  may  by  proof  of  known  conditions  that 
are  such  as  to  engender  the  belief  that  they  are 
commercial  coal  lands  be  determined  to  be  coal 
lands. 

The  testimony  from  the  record  already  recited 
proves  the  striking  similarity  in  the  occurrence  and 
mode  of  deposition  and  situation  in  the  earth  of  coal 


97 

and  oil.  If,  then,  the  standard  of  the  Diamond  Coal 
&  Coke  Company  case  it  not  applicable  to  oil,  it 
must  be  rigidly  restricted  to  coal;  and,  as  already 
pointed  out,  the  language  of  the  opinion  excludes 
only  those  minerals  "whose  mode  of  deposition  and 
situation  in  the  earth  are  so  irregular  or  otherwise 
unlike  coal  as  to  require  that  they  be  dealt  with 
along  other  lines".  Inferentially,  it  applies  to  those 
minerals  not  within  the  described  exclusion.  Judge 
Bean  found  that  the  standard  was  applicable  to  oil 
and  so  held.  Congress  nearly  twenty  years  previ- 
ously had  recognized  the  soundness  of  geologic  evi- 
dence as  the  basis  of  determining  whether  given 
lands  are  oil  lands  and  in  the  instance  cited  above 
by  legislation  prescribed  it  as  the  basis  of  such  de- 
termination. 

While  now  denying  the  propriet}^  of  determining 
the  oil  character  of  lands  by  geologic  evidence  and 
affirming  that,  on  the  contrar}',  the  drill  is  the  only 
test,  the  record  demonstrates  that  even  before  the 
date  of  the  assailed  patent  appellants  were  them- 
selves by  geologic  evidence  alone  segregating  from 
their  vast  holdings  large  areas  of  lands  upon  wliich 
there  was  neither  exposure  nor  development,  classi- 
fying them  as  oil  lands  and  withdrawing  them  from 
sale  b}^  their  land  department  as  agricultural  lands. 
Three  years  later  upon  geologic  evidence  alone  the 
Southern  Pacific  Railroad  Company,  one  of  the  ap- 
pellants, leased  to  the  Kern  Trading  &  Oil  Company, 
another  of  appellants  already  sho^n  on  pages  11  and 
12  of  this  brief  to  have  been  a  subsidiarj^  of  and 


98 

owned  by  the   Southern  Pacific   Company  and,  in 
reality,  merely  its  "fuel  department",  hundreds  and 
thousands  of  acres  of  lands  upon  which  there  was 
neither  exposure  of  oil  sand  nor  development — in- 
deed, nothing  beyond  favorable  structure,  formation 
and  relation  to  proven  lands  in  some  instances  many 
miles  distant.    Upon  the  very  principle  upon  which 
the  government  contends  that  the  lands  in  suit  were 
shown  by  the  known  conditions  to  be  oil  lands  appel- 
lants segregated  and  classified  lands  as  such;  and  it 
is  both  instructive  and  interesting  to  note  that  some 
of  the  lands  so  determined  b}^  appellants  to  be  oil 
lands  and  as  such  segregated  and  leased  to  an  oil  pro- 
duction company  adjoin  and  are  interspersed  with 
the  very  lands  which  the  government  contends  were 
kno^Ti  oil  lands  at  the  time  when  they  were  selected 
by  appellants  and  falsely  represented  to  be  non- 
mineral  agricultural  lands.     Since  more   extended 
reference  to  the  evidence  proving  the  indicated  action 
on  the  part  of  appellants  will  be  hereafter  made  in 
connection  with  another  phase  of  the  main  question 
under  consideration,  only  brief  attention  is  accorded 
it  now. 

From  1893  to  the  summer  of  1903  J.  B.  Treadwell 
was  the  oil  expert  of  the  Southern  Pacific  Company 
(R.  424).  He  got  data  or  information  upon  which 
he  made  recommendations  of  lands  to  be  withdrawn 
from  sale  from  "personal  investigation"  (R.  432-3). 
Exhibit  115  is  a  map  introduced  by  appellants  show- 
ing the  withdrawal  made  by  him  in  1900.  An  exam- 
ination of  it,  as  well  as  the  evidence  of  Treadwell 


99 

when  called  as  a  witness  for  appellants,  shows  that 
it  included  lands  further  away  from  the  outcrop  or 
producing  wells  than  the  lands  in  suit.  Indeed,  he 
included  in  his  withdrawal  sections  3,  5,  7,  9  and  17 
and  the  NWi/4  of  section  19  and  all  of  section  21  of 
the  very  township  in  which  are  the  lands  in  suit  and 
the  map,  read  in  connection  with  its  legend,  shows 
that  those  lands  were  "shaded  tracts  reserved  from 
sale  because  in  or  near  oil  territory".  (E.  3002.) 
Explaining  the  principle  upon  which  he  selected 
lands  to  be  withdrawn  from  sale  Treadwell  testified 
that  he  "followed  the  system  of  taking  the  trend  of 
the  oil  and  located  enough  so  as  to  be  sure  to  go  far 
enough  on  the  dip  to  include  all  the  oil  that  they  in 
the  future  might  develop  and  even  further".  (R. 
437.)  This  was  while  he  was  on  the  stand  as  a  gov- 
erimient  witness  and  long  before  appellants  intro- 
duced Exhibit  115,  Treadwell  testif^dng  as  a  govern- 
ment witness  that  all  of  his  maps  had  been  destroyed 
in  the  fire  of  1906  (R.  433-4)  ;  and  he  then,  in  ignor- 
ance of  the  fact  that  Exhibit  115  would  be  produced 
to  contradict  him,  stated  that  he  did  not  include  in 
his  withdrawal  any  part  of  the  Elk  Hills  (R.  435). 
Exhibit  115  shows  that  he  did  include  considerable 
portions  of  the  Elk  Hills  and,  indeed,  every  section 
of  land  adjoining  in  every  direction  the  lands  in 
suit;  and  he  himself  in  effect  admitted  that,  if  he 
had  not  been  ignorant  of  the  fact  that  the  lands  in 
suit  had  been  surveyed  and  if  they  had  been  then 
patented  to  the  Southern  Pacific  Railroad  Company, 
he  would  have  shaded  and  reserved  them  from  sale 
(R.  3458-9). 


100 

Thus  it  is  shown  that  four  years  before  the  patent 
now  assailed  appellants  through  their  oil  expert 
followed  the  "system  of  taking  the  trend  of  the  oil" 
for  the  purpose  of  determining  what  lands  were  oil 
lands.  Following  the  "sj^stem  of  taking  the  trend" 
along  the  dip  can  mean  nothing  less  than  that  he 
started  from  the  exposure  or  well,  ascertained  and 
followed  the  dip  of  the  strata  and  determined  geo- 
logically that  lands  on  the  dip,  though  many  miles 
away  from  the  exposure  or  well,  were  oil  lands.  .  Can 
appellants  be  heard  to  complain  that  the  govemn- 
ment  invokes  the  very  "system"  employed  by  their 
own  expert  ^ 

In  1903  the  Southern  Pacific  Company,  wishing  to 
separate  its  oil  production  from  other  departments, 
created  a  "fuel  department"  and  organized  it  into 
a  corporation,  the  Kern  Trading  &  Oil  Company 
(R.  3085).  Instructions  were  given  to  its  then  head 
geologist,  E.  T.  Dumble,  to  select  the  oil  lands  of  the 
Southern  Pacific  Railroad  Company  to  be  leased  to 
and  operated  by  this  new  department  (R.  2911). 
Dumble  submitted  the  questions  of  the  lands  to  be 
selected  to  Josiah  Owen,  a  geologist  and  field  man  of 
appellants  (R.  2910).  The  Kern  Trading  &  Oil 
Company  lease,  of  which  much  will  be  heard  later, 
contains  the  catalogue  and  description  of  the  lands 
so  selected  (Ex.  YY;  R.  1101,  1106-7).  This  lease 
includes  section  31  in  township  30-23,  the  township 
in  whi(^h  the  lands  in  suit  lie,  section  25  of  30-22  and 
section  5  of  31-23,  adjoining  or  cornering  the  lands 
in   suit;     from    which   it    appears    that    in    1903 


101  ' 

appellants  were  then  following  the  "system"  in- 
augurated by  Treadwell  and  to  the  application  of 
which  the}^  now  object;  for  they  were  then  frans- 
f erring  to  their  "fuel  department"  as  oil  lands 
sections  upon  which  there  was  neither  exposure  nor 
well  and  which,  accordingly,  they  could  determine 
and  did  accordingly  determine  to  be  oil  lands  solely 
upon  geologic  evidence — that  is,  by  following  the 
dip  of  the  strata  from  knoAAoi  exposures  or  wells  and 
assuming  the  continuation  and  persistence  of  tlce 
sands  and  contained  oil.  It  is  surely  not  doing  vio- 
lence to  the  proprieties  to  observe  that  the  estimate 
placed  by  appellants  in  1900  and  1903  upon  geologic 
evidence  is  in  striking  contrast  to  the  execration  and 
contumelv  with  which  thev  now  view  it.  Then  it 
was  a  useful  basis  for  practical  operation — now  it  is 
condemned  as  synomonous  with  "guessing". 

In  the  Diamond  Coal  and  Coke  Company  case  the 
basic  facts  were  the  outcrop  to  the  east  and  the  dip 
of  the  strata  towards  the  lands  there  in  suit.  All 
that  was  there  conceded  was  that  "the  coal  horizon 
— meaning  the  coal-bearing  strata  shown  at  the  out- 
crop, but  not  necessarily  the  coal — passed  through 
the  lands  in  controversy".  From  this  it  was  held 
that  the  presence  of  coal  under  the  lands  in  question 
could  be  assumed  or  deduced.  In  the  instant  case 
there  are  the  long  line  of  seepages  and  many  wells 
to  the  west  and  the  known  dip  of  the  oil-containing 
sands  towards  the  lands  in  suit  and,  in  addition,  the 
record  is  not  without  evidence  of  the  known  presence 
of  oil  sand  and  outcrop  upon  and  beyond  the  lands 


•'''  102 

in  suit.  Indeed,  the  parallel  is  complete.  In  the 
case  of  coal  the  Supreme  Court  says  that  upon  such 
evidence  practical  men  invest  large  sums  of  money. 
The  like  appears  from  the  testimony  already  recited 
in  the  case  of  oil;  and  it  will  hereinafter  be  sho-svn 
that  practical  men  in  the  case  of  the  Elk  Hills  upon 
no  more  evidence  than  this  record  discloses  invested 
more  than  half  a  million  dollars. 

September  21,  1903,  E.  T.  Dumble,  chief  geologist 
of  appellants,  wrote  a  letter  to  Julius  Kruttschnitt, 
then  assistant  to  the  president  of  the  Southern  Pa- 
cific Company  (E.  2912),  being  defendant's  Exhibit 
119,  in  which  he  offered  certain  suggestions  concern- 
ing the  operation  of  the  newly  formed  "fuel  depart- 
ment", the  Kern  Trading  &  Oil  Company.  After 
advising  that  the  "Kern  Trading  &  Oil  Company 
should  acquire  by  purchase  or  lease  such  lands  now 
belonging  to  the  Southern  Pacific  Company  as  we 
consider  valuahle  for  oil  purposes,"  he  proceeds  as 
follows : 

"The  attached  maps  show  these  under  three 
heads:  first,  oil  lands  proven  or  practically 
proven,  colored  red;  very  probable  oil  lands, 
colored  green;  probable  oil  lands,  colored  blue. 
Of  the  oil  value  of  the  first  two  classes  there  is 
very  little  dou])t;  tlte  tliird  depends  in  part  upon 
the  continuance  of  normal  dips  and  conditions, 
dut  in  addition  it  represents  untested  anti- 
clinals  u'hich  show  good  indications  of  oil.  I 
consider  that  all  of  these  lands  should  bo  under 
the  control  of  this  company."    (R.  2912-3.) 

In  this  letter  the  chief  expert  of  appellants  is  seen 
in  1903,  a  year  before  patent,  concluding  from  geo- 


103 

logic  evidence  alone  that  certain  lands  are  oil  lands. 
That  is,  starting  from  the  proven  he  concluded  that 
unproved  lands  contained  oil  because  of  the  persist- 
ence of  oil  sands  known  at  the  proven  point  to  con- 
tain oil.  His  course  of  reasoning  manifestly  and 
necessarily  was  that,  since  at  one  point  or  at  several 
points  he  found  oil  either  in  a  seepage  or  in  a  well, 
he  would  find  it  at  a  distance  along  the  continuation 
of  the  stratum  of  sand  which  was  found  to  contain 
oil  at  the  point  of  starting,  provided  the  dip  and 
conditions  continued  normal — an  illuminating  appli- 
cation in  1903  to  oil  of  the  principle  many  years  later 
approved  by  the  Supreme  Court  for  determining 
that  lands  are  coal  lands.  His  deduction  was  purely 
geologic  and  the  counterpart  of  the  reasoning  of  Dr. 
Branner,  Veatch,  Barrett,  Youle  and  Owen, — resting 
upon  the  basis  of  classification  approved  by  Con- 
gress and  applied  by  the  court  of  last  resort. 

It  remains  to  note  reports  of  the  geologist  of  ap- 
pellants concerning  the  persistence  of  the  oil  sands 
so  consjDicuous  at  McKittriek. 

E.  T.  Bumble,  chief  geologist  of  the  Southern  Pa- 
cific Company,  said  of  Josiah  Owen  that  he  had  a 
faculty  of  carrying  underground  conditions  in  his 
mind  more  perfectly  than  anyone  whom  he  had  ever 
known  (E.  3037).  Owen  was  an  expert  oil  geologist 
of  appellants  from  1902  to  1909.  In  February,  1903, 
he  took  up  the  investigation  of  the  oil  field  at  Mc- 
Kittriek and  on  March  25,  1903,  made  a  detailed 
report  to  Diunble  which  was  introduced  by  the  gov- 


104 

erninent  as  Exhibit  4-J  (R.  1615).  McKittrick,  it 
will  be  remembered,  is  four  miles  west  of  the  lands 
ill  suit.    Of  the  McKittrick  field  he  says : 

"There  is  but  one  oil  horizon  in  this  field. 
....  In  the  direction  of  Midw^ay  I  find  that 
the  McKittrick  fold  flattens  out  in  the  valley, 
but  other  hills  further  on  in  the  same  direction 
would  indicate  that  it  may  extend  to  near  the 
Kern  lake.  The  Midway  oil  sands  belong  to  the 
same  horizon  as  the  McKittrick  oil  sands."  (R. 
1617.) 

It  cannot  be  knovrn  positively  whether  by  "other 
hills"  Owen  intended  to  refer  to  the  Elk  Hills  or  the 
Buena  Vista  Hills  or  both;  but  the  inherent  proba- 
bilities are  that  he  had  in  mind  both.  Further  on  in 
this  report  he  says: 

"I  have  traced  the  outcrop  of  the  oil  horizon 
all  the  way  to  Sunset  oil  field  and  find  that  there 
is  hid  the  one  oil  sand.  I  believe  it  will  be  possi- 
ble to  trace  the  same  horizon  to  the  Kern  River 
fields.  There  are  several  reasons  for  believing 
that  they  all  belong  to  the  same  zone."  (R. 
1620.) 

A  line  drawn  from  McKittrick  to  the  Kern  River 
fields  would  pass  through  the  north  end  of  the  lands 
in  suit,  the  distance  from  McKittrick  to  the  lands 
in  suit  being  four  miles  and  from  the  lands  in  suit 
to  the  Kern  River  fields  about  twentj^-five  miles. 

Thus  in  1903  we  have  the  evidence  of  this  expert 
field  geologist  of  appellants  themselves  that  by  geo- 
logic evidence  he  had  arrived  at  the  conclusion  that 
the  oil  sands  persisted  from  McKittrick  under  the 


105 

lands  in  suit  and,  indeed,  twenty-five  miles  beyond. 
His  report  is  eloquent  of  his  faith  prior  to  the 
assailed  patent  in  the  value  of  geologic  evidence  in 
determining  the  direction  and  persistence  of  oil 
sands  from  the  point  where  their  presence  is  proven 
by  natural  exposure  or  actual  development.  Obvi- 
ously, he  employed  and  followed  the  same  course  of 
reasoning  and  deduction  advocated  by  "the  expert 
for  the  government"  in  the  Diamond  Coal  &  Coke 
Company  case  and  approved  by  the  Supreme  Court. 
He  believed  that  the  oil  horizon  at  McKittrick,  under 
the  Elk  and  Buena  Vista  Hills  and  in  the  Kern 
River  fields  was  one  and  the  same — the  exact 
parallel  of  the  admission  in  the  Diamond  Coal  & 
Coke  Company  case  that  the  coal  horizon — not  the 
coal  itself,  but  only  the  strata  which  in  the  outcrop 
contained  coal — passed  under  the  lands  there  in  con- 
troversy. 

In  1910  there  had  been  no  development  whatever 
in  the  Elk  Hills.  Their  condition  was  in  all  respects 
as  it  had  been  in  1903  and  1904;  but,  nevertheless, 
the  Associated  Oil  Company,  at  that  time  controlled 
and  dominated  by  the  appellants  (R.  3592)  which 
owned  fifty-one  per  cent  of  its  capital  stock  and  hav- 
ing as  the  chairman  of  its  board  of  directors  Mr. 
Wm.  F.  Herrin  (R.  3613),  the  general  counsel  of 
appellants  and  a  vice-president  of  the  Southern 
Pacific  Company  (p.  20  of  Vol.  of  "Documents  and 
Evidence  Not  Printed"),  spent  more  than  half  a 
million  dollars  in  the  development  for  oil  purposes 
of   even   numbered   sections   interspersed   with   the 


106 

lands  in  suit  and  completely  surrounding  parts  of 
them  (R.  3123).  The  evidence  in  proof  of  this  fact 
was  offered  by  appellants.  This  action  of  the  Asso- 
ciated Oil  Company  constitutes  a  striking  instance 
of  the  application  to  oil  of  the  identical  principle 
upon  which,  in  the  case  of  coal  as  pointed  out  by  the 
court  in  the  Diamond  Coal  and  Coke  Company  case, 
practical  coal  men  "regard  lands  as  valuable  for 
coal  and  invest  in  them  as  such".  It  is  true  that  the 
evidence  in  question  relates  to  a  period  postdating 
the  patent;  but  that  subtracts  nothing  from  its  rele- 
vancy and  competency  upon  this  point  or  from  the 
inescapable  implication  that  practical  oil  men  follow 
in  the  footsteps  of  practical  coal  men  and  invest 
their  money  upon  faith  in  the  reliableness  of  geo- 
logic evidence  and  deduction. 

Enough  has  been  shown,  it  is  submitted,  to  demon- 
strate the  soundness  of  the  thesis  that  the  rule  laid 
down  in  the  Diamond  Coal  &  Coke  Company  case  is 
applicable  to  the  instant  case  and  furnishes  the  test 
by  which  it  could  have  been  determined  before  pa- 
tent and  in  advance  of  development,  upon  the  basis 
of  the  known  conditions  hereinafter  to  be  reviewed, 
that  the  lands  in  suit  were  known  mineral  lands. 

There  is  in  reality  but  one  question  in  this  case : 

Were  the  known  conditions  at  the  time  of  the  proceedings  which  re- 
sulted in  the  assailed  patent  plainly  such  as  to  engender  the  belief  that 
the  lands  in  suit  contained  oU  in  such  quantity  and  of  such  quality  as 
would  render  its  extraction  profitable  and  justify  expenditures  to  that 
end? 


107 

Next,  therefore,  will  follow  an  examination  of  the 
evidence  showing  these  conditions  and  leading  ir- 
resistibly to  the  conclusion  that  they  were  not  only 
of  the  character  required  by  the  rule,  but  that  they 
actually  engendered  in  the  Southern  Pacific  Com- 
pany and  the  Southern  Pacific  Eailroad  Company 
the  belief  required  by  the  rule.  What  the  known 
conditions  were  will  betreated  under  the  heading: 

THE  KNOWN  CONDITIONS. 

This  topic  will  be  subdivided  into  the  following 
heads,  some  of  which  will  themselves  be  appropri- 
ately subdivided: 

A.  Conditions  and  knowledge  thereof. 

1.  Structure  of  the  lands  in  suit. 

2.  Situation  of  the  lands  in  suit  with  reference 
to  the  accepted  source  of  oil. 

3.  Evidences  of  oil  in  the  Elk  Hills. 

4.  Seepages  and  oil  sands  in  the  neighborhood 
generally. 

5.  Oil  development  in  the  vicinity  of  the  lands  in 
suit. 

6.  Geological  connection  between  foregoing  lands 
and  those  in  suit. 

7.  Non-agricultural  character  of  lands  in  suit. 

B.  Belief,  general  and  specific. 


108 

1.     STEUCTUKE   OF   THE  LANDS  IN  SUIT. 

(a)     Anticlinal. 

The  lands  in  suit  lie  on  both  sides  of  the  summit 
of  the  Elk  Hills  (E.  690)  and  for  convenience  are  re- 
ferred to  herein  as  the  Elk  Hills. 

The  structural  character  of  the  Elk  Hills  is  evi- 
dent to  the  most  casual  observer  (R.  702).  Struc- 
tural hills  are  contradistinguished  from  hills  that 
owe  their  form  or  elevation  to  erosion,  that  is, 
that  are  left  ujDstanding  above  the  surrounding  sur- 
face because  of  the  greater  resistance  of  the  ma- 
terials of  which  they  are  composed.  Structural  hills 
owe  their  elevation  to  torsion  of  the  crust  of  the 
earth,  by  which  the  stratified  beds  of  which  they  are 
composed  are  folded  so  that  they  are  thrust  or 
pushed  above  the  general  level  of  the  country.  The 
Elk  Hills  constitute  an  anticlinal  fold  in  which  the 
present  topography  shows  the  essential  slope  of  the 
fold.  That  fold  has  a  few  wrinkles  in  it  and  it  is 
these  wrinkles  in  the  grand  uplift  or  fold  which  are 
referred  to  as  different  anticlines — they  are  anti- 
clinal axes  of  minor  folds,  the  hills  themselves  being 
a  great  fold.    (  R.  714). 

The  Elk  Hills  are,  like  their  neighbors,  the  Buena 
Vista  Hills,  an  elongated  dome  of  ideal  structure  for 
oil  accumulation.    (R.  702-3). 

That  an  anticline  runs  through  the  Elk  Hills  is 
not  in  dispute.  Indeed,  this  anticline  was  observed 
and  carefully  traced  prior  to  patent  by  Josiah  Owen, 


109 

a  skilled  geologist  of  appellants,  on  a  map  which  he 
enclosed  in  a  letter  of  March  25,  1903,  to  E.  T. 
Dimible,  chief  geologist  of  the  Southern  Pacific 
Company  (Ex.  157;  R.  2977).  Owen  had  entered 
the  employ  of  the  appellants  in  the  fall  of  1902.  (R. 
2900-1).  He  was  at  once  assigned  to  the  examina- 
tion of  the  Southern  Pacific  Railroad  Company's  oil 
lands  in  California  and  in  March,  1903,  wrote  the 
letter  with  which  was  enclosed  the  map  in  question. 
This  map,  introduced  by  appellants,  delineates  clear- 
ly the  anticlinal  structure  of  the  lands  in  suit.  More- 
over, he  told  F.  M.  Anderson,  another  of  appellants' 
geologists  and  witnesses,  that  he  had  been  in  the  Elk 
Hills  and  that  he  recognized  their  anticlinal  struc- 
ture (R.  2598).  He  was  well  acquainted  with  it, 
according  to  his  best  friend,  S.  P.  Wible  (R.  321). 

F.  M.  Anderson,  just  referred  to,  testified  that  the 
Elk  Hills  is  rather  a  broad  fold  of  dome-like  char- 
acter and  that  the  anticline  of  the  Elk  Hills  is  a 
broader  arch  than  that  of  the  Buena  Vista  Hills 
(R.  2618) ;  also,  that  an  anticlinal  structure  is  usu- 
ally the  most  favorable  for  the  reason  that  it  facili- 
tates the  accumulation  and  retention  of  oil  if  the 
right  stratigraphic  and  other  conditions  are  present 
(R.  2623);  further,  that  the  general  position  and 
the  general  character  of  the  Elk  Hills  had  attracted 
his  interest  from  the  first  (R.  2625). 

W.  H.  Ochsner,  another  of  appellants'  geologists 
and  experts,  testified:  ^' Where  the  anticline  is  as 
clearly  defined  as  in  the  Elk  Hills  we  have  the  ele- 
ments of  an  ideal  spot  by  an  anticlinal  structure." 


110 

(R.  2211).  He  stated  also  that  the  mere  sight  of  the 
uplift  there  would  arouse  the  suspicion  of  a  com- 
petent geologist  as  to  the  oil-bearing  character  of  the 
Elk  Hills  and  that  that  suspicion  would  have  been 
immediately  aroused  without  any  investigation.  (R. 
2212). 

The  record  is  replete  with  evidence  of  the  anti- 
clinal structure  of  the  Elk  Hills  and,  indeed,  that 
such  w^as  their  structure  is  not  disputed  by  appel- 
lants. That  their  structure  was  known  and  recog- 
nized and  that  the  significance  of  the  structure  was 
appreciated  appears  from  the  testimony  of  many 
witnesses. 

S.  G.  Drouillard  testified  that  their  formation  is 
exactlv  like  that  of  the  other  oil  country  and  that  the 
anticline  was  found  running  parallel  with  McKit- 
trick,  northwest  and  southeast  (R.  116-117)  and  in  a 
direction  which  would  take  it  generally  through  the 
center  of  the  hills  (R.  124). 

L.  G.  Sarnow,  who  for  years  worked  for  appel- 
lants under  their  oil  expert,  J.  B.  Treadwell,  and 
drilled  for  them  thii*ty  wells  in  the  Kern  River 
field  and  three  in  the  McKittrick  field  (R.  133-4), 
testified  that  the  formation  of  the  Elk  Hills  is  shale, 
gypsum  and  sand  and  is  substantially  the  same  as 
the  formation  of  the  eastern  flank  of  the  Temblor 
range  (R.  134). 

Ira  M.  Anderson,  who  had  had  many  years'  ex- 
perience exploiting  and  developing  oil  territory  and 


Ill 

had  drilled  in  four  or  more  states,  examined  the 
Kern  Eiver,  Sunset,  McKittrick  and  Midway  fields 
and  found  them  all  about  the  same  (E.  153-4).  He 
examined  the  Elk  Hills  and  found  shale,  g}^sum  and 
oil  sand  (E.  155)  and  an  anticline  running  through 
the  hills  northwest  and  southeast  (E.  160-1).  There 
is  quite  a  pronounced  anticline  near  the  town  of 
McKittrick  and  to  the  south  and  west  of  it.  It  dips 
away  from  the  town  of  McKittrick.    (E.  162-3). 

F.  J.  Sarnow  drilled  ten  producing  wells  in  the 
McKittrick  field  under  Trea dwell  for  appellants  (E. 
164-5).  He  stated  that  at  the  time  of  testifying  he 
was  drilling  on  section  6  of  30-22  on  the  same  anti- 
cline that  runs  through  the  Elk  Hills  (see  exhibit 
157) ;  that  he  had  drilled  three  wells  there  and  was 
working  on  the  fourth ;  that  he  concluded  that  there 
is  an  anticline  there  because  it  runs  from  near 
Buena  Vista  Lake  to  thirty-five  miles  northwest  of 
McKittrick.  He  said  further  that  he  had  drilled 
six  wells  on  that  same  anticline  and  that  sometimes 
you  don't  see  it  for  a  couple  of  miles  and  then  it 
crops  up  again  with  blow-outs  of  oil  sand;  that  the 
anticline  is  an  outcropping  of  oil  sands  and  blow- 
outs and  the  formation  surrounds  it,  the  formation 
being  shale,  clay  and  g}^sum ;  and  that  the  oil  sands 
show  stratification  from  which  you  can  determine 
that  it  is  an  anticline  (E.  173-4). 

M.  S.  Wagy  was  in  the  Elk  Hills  about  1900  and 
located  for  oil  purposes  in  30-23,  recognizing  the 
general  trend  of  the  ledge  running  through  the  hills 
and  the  formation  pitching  to  the  southwest  con- 


1V2 

stituting  an  anticline  running  northwest  aad  south- 
west (R.  179-80). 

B.  K.  Lee,  after  mentioning  many  outcrops  and 
seepages  in  the  vicinity  of  McKittrick,  stated  that  he 
noticed  in  1900  evidences  of  an  anticline  in  the  rail- 
road cut  in  section  14  of  to^Tiship  30-22  in  the  Elk 
Hills  (E.  227)  and  later,  starting  from  section  36  of 
30-23,  followed  the  anticline  "right  through  from 
there  to  the  cut  and  drove  a  team  across,  a  distance 
of  seven  miles",  finding  and  tracing  without  diffi- 
culty the  pitch  both  to  the  north  and  south  (R.  232). 

S.  P.  Wible  was  familiar  with  the  Elk  Hills  since 
1893.  He  had  drilled  many  wells  and  had  had  long 
experience  in  the  oil  business  (R.  318).  He  stated 
that  there  is  an  anticline  in  the  Elk  Hills  which  could 
be  detected  in  the  canj^on  in  a  number  of  sections,  in 
a  dozen  different  places,  just  north  of  the  apex  of 
the  hills ;  that  it  is  verv  well  defined  in  section  14  of 
30-22  just  at  the  northeast  end  of  the  Elk  Hills  in 
the  railroad  cut  and  that  this  is  a  continuation  of  the 
anticline  running  northwest  and  southeast  through 
the  Elk  Hills  which  can  be  followed  over  the  hills 
to  the  southeast ;  and  that  Josiah  Owen,  geologist  of 
the  Southern  Pacific  Company  whom  he  knew  well, 
was  acquainted  with  it  (R.  320-1).  He  further  testi- 
fied that  before  1904  there  were  two  oil  wells  on  sec- 
tion 6  of  30-22  and  one  on  section  1  of  30-21,  and 
three  on  the  same  anticline  which  runs  through  the 
Elk  Hills  (R.  321).  (The  record  says  section  1  of 
30-22  by  mistake).  He  stated  that  the  formation  of 
30-23  and  30-24  consisted  of  shale,  sandstone,  clay, 


113 

fullers-earth  and  gypsum,  fullers-earth,  gypsum  and 
oil  usually  occurring  in  conjunction  (R.  322). 

H.  P.  Dover  started  in  the  oil  business  in  1901  and 
had  been  in  it  constantly.  He  did  not  find  quite  as 
much  shale  in  the  Elk  Hills  as  in  the  Midway,  but 
the  formation  is  favorable  for  oil  (R.  463). 

Colon  F.  Whittier,  who  had  been  in  the  oil  busi- 
ness fourteen  years  and  produced  a  million  barrels 
a  year,  first  went  to  McKittrick  in  1902.  (R.  469). 
He  knew  the  Elk  Hills  and  stated  that  the  anticline 
running  through  them  is  sufficiently  marked  to  be 
seen  from  the  train  as  it  goes  through  the  cut  in 
section  14  of  30-22  (R.  469). 

Frank  Barrett  had  had  practical  experience  in  the 
oil  business  well-nigh  all  his  life.  He  first  went  into 
the  Coalinga  field  in  1895  and  brought  in  the  first 
paying  well  in  that  field.  He  visited  the  Elk  Hills  in 
1899  and  went  through  them  on  a  tour  of  investiga- 
tion (R.  479).  He  noticed  very  pronounced  indica- 
tions of  anticlines  in  the  Elk  Hills  and  did  Tivt  think 
the  characteristics  of  the  formation  at  all  dissimilar 
to  the  formation  around  McKittrick,  Taft  and  Mari- 
copa (R.  480). 

Chas.  W.  Lamont,  also  an  experienced  oil  man 
(R.  580),  was  in  the  Elk  Hills  in  1899  and  concluded 
that  section  32  of  30-24  was  the  top  of  the  anticline 
and  at  that  time  took  section  14  of  30-22  to  be  the 
west  end  of  the  anticline  (R.  581). 


114 

F.  O.  Martin,  an  expert  engineer,  geologist  and 
mineralogist  (R.  609-10),  described  the  Elk  Hills  as 
an  anticlinorum,  meaning  thereby  an  anticlinal  ridge 
with  a  major  anticline  and  smaller  wrinkles  or  folds 
running  parallel  or  nearly  so  to  the  main  ridge, 
whose  topography  bears  a  close  resemblance  to  the 
geological  structure  (E.  612).  There  is  evidence  on 
the  surface  that  the  conditions  in  the  hills  are  prac- 
tically the  same  as  when  first  uplifted  and  the}"  were 
practically  the  same  in  1903  as  in  1910. 

John  Lang,  a  witness  for  appellants,  thought  that 
the  anticline  in  the  Elk  Hills  runs  from  northwest  to 
southeast  and  had  seen  outcrojDpings  of  it  in  section 
14  of  30-22  and  noticed  the  anticlinal  fold  there.  He 
had  observed  the  broken  and  smashed  conditions 
around  McKittrick  that  had  resulted  from  disturb- 
ances and  that  there  was  no  evidence  of  such  dis- 
turbances in  the  Elk  Hills  (R.  1969-70). 

Samuel  Shannon,  called  by  appellants,  who  had 
made  in  1909  locations  in  the  Elk  Hills  on  which  he 
had  spent  eight  or  nine  thousand  dollars  (R.  2140-1), 
described  them  as  having  pretty  much  the  same  char- 
acteristics as  the  Buena  Vista  Hills,  admittedly 
productive  oil  territory  (R.  2143). 

Other  witnesses  to  the  same  effect  might  be  quoted ; 
but  enough  has  been  shown  to  prove  the  anticlinal 
structure  of  the  lands  in  suit.  As  already  indicated, 
this  is  not  disputed  by  appellants. 


115 
(b)     The  significance  of  anticlinal  structure. 

This  subject  may  be  dismissed  with  a  few  words 
— not,  however,  because  unimj^ortant,  but  because 
not  a  subject  of  controversy.  The  testimony  of  two 
government  experts  and  that  of  an  appellants'  ex- 
pert will  suffice. 

F.  Oskar  Martin  stated,  in  effct,  that  the  most 
favorable  indication  of  the  oil  character  of  lands  is 
anticlinal  structure  and  that  it  is  a  well  known  fact 
that  along  the  summits  of  anticlines  oil  tends  to  ac- 
cumulate and  that  these  summits  are  the  most  favor- 
able spots  for  such  accumulation  (R.  613). 

F.  M.  Anderson,  a  geologist  and  expert  witness  of 
appellants,  gave  the  following  testimony : 

"A.  The  outcrop  of  oil  sands,  of  course,  taken 
in  connection  with  the  dip  and  strike  of  the 
same  and  the  general  appearance  of  the  sand 
and  the  overlying  strata,  is  one  of  the  most 
favorable ;  and  the  occurrence  of  asphaltum,  oil 
springs  and  seepages  and  so  forth,  taken  in  con- 
nection with  other  things,  is  a  very  favorable 
indication. 

''Q.     Structure? 

"A.     And  structure. 

"Q.  What  sort  of  structure  would  you  re- 
gard as  favorable? 

"A.  Usually  an  anticlinal  structure  is  the 
most  favorable. 

"Q.     And  why  is  that  so? 

''A.     It  facilitates  the  accumulation  and  re- 


116 

tention   of   oil  if   tlie   right   stratigraphic   con- 
ditions and  other  conditions  are  present." 

(R.  2622-3). 

There  is  no  controversy  here  or  elsewhere  as  to 
the  proposition  that  the  geological  structure  most 
favorable  to  the  accumulation  and  retention  of  oil 
is  the  anticlinal.  The  commerical  oil  of  to-day  is  oil 
that  has  accumulated  and  been  stored  in  past  ages  in 
nature's  anticlinal  reservoirs.  Accordingly,  in  ex- 
ploring for  a  present  supply  the  skilled  oil  man  di- 
rects his  attention  to  the  natural  reservoirs  of  oil 
found  in  anticlinal  structures.  This  is  what  the 
several  witnesses  whose  testimony  has  been  recited 
had  in  mind  when  speaking  of  the  anticlinal  struc- 
ture of  the  lands  in  suit. 

Nor  is  there  controversy  that  the  Elk  Hills,  in- 
cluding the  lands  in  suit,  were  and  are  structurally 
ideal  reservoirs  for  the  accumulation  and  retention 
of  oil.  Exhibit  157,  appellants'  own  evidence,  shows 
clearly  the  anticlinal  structure  of  the  lands  in  suit 
and  Veatch  testified  that  these  lands  lie  on  both  sides 
of  the  summit  of  the  hills  (690),  Dr.  Branner  adding 
that  the  general  structure  was  perfectly  simple  and 
the  conditions  for  the  accumulation  of  oil  favorable 
along  certain  folds  that  were  easily  seen  by  any  geol- 
ogist (R.  1003).  That  this  was  one  of  the  known  con- 
ditions appears  not  only  from  the  evidence  already 
recited,  but  follows  of  necessity  from  the  fact  that 
it  was  so  conspicuous  that  it  could  be  plainly  seen 
from  McKittrick  (S.  P.  Wible,  R.  320),  as  also  from 


117 

the  railroad  cars  as  they  passed  through  from 
Bakersfield  to  MeKittrick  and,  of  course,  returning 
(C.  F.  Whittier,  R.  469). 

Finally,  according  to  Dr.  Branner,  the  general 
structure  of  the  Elk  Hills  is  so  favorable  to  the  ac- 
cumulation of  oil  in  that  region  that,  even  if  drilling 
had  gone  to  five  thousand  feet  and  not  found  oil,  he 
would  yet  advise  a  company  to  not  give  up  hope  of 
finding  it  (R.  1008). 

(c)     Relation  of  accumulation  to  structure. 

Oil  does  not  as  a  rule  remain  in  the  place  where 
it  is  found.  It  passes  out  into  an  absorbing  bed 
where  it  accumulates.  Hence  the  necessity  of  favor- 
able structure.  It  is  formed  by  the  death  of  myriads 
of  small  marine  infusoria  called  diatoms;  but  its 
accumulation  depends  upon  the  nature  of  the  beds 
into  which  it  passes.  (Dr.  Branner,  R.  1011).  As 
will  more  fully  hereinafter  appear,  even  though  the 
oil  be  formed  in  abundant  quantity  and  the  porous 
beds  be  at  hand,  unless  the  structure  of  the  beds  is 
such  as  to  retain  the  oil  as  it  passes  into  them,  there 
is  no  retention,  bat  infinite  dissipation.  Hence  the 
necessity  of  the  anticlinal  structure  in  which  to  trap 
and  confine  the  migrating  oil  (R.  1011,  1016-17). 

2.     FAVORABLE  SITUATION  OF  THE  LANDS  IN  SUIT  WITH  REF- 
ERENCE TO  THE  SOURCE  OF  OIL. 

The  record  exhibits  unanimous  agreement  that  the 
accepted  source  of  the  oil  in  the  California  fields  is 
shales.     Dr.  Branner  lays  this  down  categorically 


118 

(R.  1010-11).  He  testified  that  the  oil  in  the  Cali- 
fornia fields  originally  developed  from  a  series  of 
beds  designated  by  geologists  as  "Monterey  shales'' 
— a  series  of  rocks  made  up  of  the  skeletons  of  dia- 
toms that  have  accumulated  in  infinite  quantities, 
especially  about  the  southern  end  of  the  San  Joa- 
quin Valley,  the  name  "Monterey  shales"  being  local 
and  given  because  rocks  of  the  same  age  and  gen- 
eral character  occur  at  Monterey,  California  (R. 
1008-9).  He  explained  that  diatoms  float  near  the 
surface  of  the  water  while  alive  and,  upon  dying, 
sink  wherever  they  are,  whether  in  shallow  or  deep 
water.  In  the  case  of  marine  deposits,  he  said,  these 
currents  sweep  down  from  the  north  and  have  been 
pouring  in  for  millions  of  years  from  the  same 
source  and  accumulating  where  the  coastal  condi- 
tions were  favorable.  Further  explaining  that  it 
would  be  erroneous  to  attribute  all  of  the  oil  to  the 
"Monterey  shales",  he  stated  that,  in  looking  over 
lands  that  he  had  been  called  upon  to  examine  for 
petroleum,  he  searched  for  these  diatomaceous 
shales  and,  because  of  the  enormous  period  of  time 
during  which  they  had  been  accumulating,  these  dia- 
toms were  not  associated  exclusively  with  "Monterey 
shales"  nor  their  accumulations  confined  to  the 
period  during  which  these  specific  shales  were  being 
heaped  up;  so  that,  wherever  he  had  found  marine 
diatoms  accumulated  in  considerable  quantities, 
whether  in  the  Monterey  or  other  shales,  he  consid- 
ered that  there  was  a  legitimate  place  to  look  for 
petroleum  (R.  1009-10-11). 


119 

Dr.  Branner  fui'ther  testified  that  at  the  southern 
end  of  the  San  Joaquin  valley  these  diatomaeeous 
shales  have  a  thickness  of  five  thousand  feet  and  that 
such  a  great  thickness  would  immediately  make  a 
competent  geologist  prick  up  his  ears  and  say:  "Here 
is  a  chance  for  an  enormous  accumulation  of  oil." 
(R.  1012-13).  With  reference  to  the  Elk  Hills  he 
stated  that  their  general  geology  would  lead  him  to 
infer  that  diatomaeeous  shale  was  under  them  and 
in  great  thickness  (R.  1020).  They  are  situated,  he 
said,  "right  about  in  front  of  the  thick  portions  of 
these  Monterey  shales.  The  thickest  parts,  begin- 
ning up  here  some  way  north  of  McKittrick,  come — 
oh,  perhajDS,  twenty  miles  or  more  or  so  northwest 
of  McKittrick  and  from  there  down  to  the  vicinitv 
of  Maricopa  is  the  very  area  in  which  these  shales 
have  those  great  thicknesses ;  and  these  Buena  Vista 
Hills  and  Elk  Hills  lie  right  off  towards  the  east, 
northeast,  of  those  hills."  (R.  1022).  It  seemed  to 
him  that  the  best  chances  for  oil  in  the  whole  of  that 
region,  in  which  were  some  of  the  greatest  oil  fields 
in  the  world,  were  in  the  Elk  Hills  and  Buena  Vista 
Hills  (R.  1024).  It  will  be  borne  in  mind  that  Dr. 
Branner  stated  that  these  conditions  were  such  as  to 
"make  any  competent  geologist  prick  up  his  ears" 
and  that  one  who  did  not  recognize  the  structure, 
etc.,  was  not  competent.  This  is  especially  relevant 
and  pointed  in  view  of  the  presence  and  work  of  ap- 
pellants' geologists  and  oil  experts,  Dumble,  Owen, 
F.  M.  Anderson,  Treadwell  and  others  in  the  region 
of  the  lands  in  suit  prior  to  patent,  of  which  more 
will  be  said  later. 


120 

F.  M.  Anderson,  upon  whose  testimony  appellants 
rely  most  strongly,  admitted  that  the  Elk  Hills,  lying 
out  some  distance  from  the  line  of  outcrop,  are  in  a 
favorable  place  for  the  thickening  of  the  diatoma- 
ceous  beds  which  are  supposed  to  be  the  origin  of 
oil  (R.  2627). 

Thus  it  appears  from  the  testimony  of  the  gov- 
ernment's most  eminent  expert  and  that  of  appel- 
lants' geologist  and  most  prominent  expert,  who  was 
in  their  service  before  patent,  that  the  lands  in  suit 
are  most  favorably  situated  with  reference  to  the 
source  of  the  oil  which  has  made  the  region  round 
about  one  of  the  richest  and  most  famous  oil  fields 
in  the  world;  and  their  testimony  upon  this  point 
stands  uncontradicted  and  unquestioned  upon  this 
record.  It  necessarily  follows  that  this  favorable 
situation  was  one  of  the  known  conditions  prior  to 
patent.  It  is  recognized  now  at  a  glance  and  is  af- 
firmatively shown  to  have  been  known  by  at  least 
one  of  appellants'  experts  who  will  be  shown  later  to 
have  been  busying  themselves  prior  to  patent  with 
minute  investigation  and  examination  of  these  and 
neighboring  lands. 

3.     EVIDENCES  OF  OIL  IN  THE  ELK  HILLS. 

(a)     Introductory'. 

The  favorable  structure  of  the  lands  in  suit  and 
their  favorable  situation  with  reference  to  the  source 
of  oil  have  been  shown.  It  is  now  proposed  to  recite 
the  testimony  relating  to  the  actual  existence  prior 
to  patent  of  known  evidences  of  oil  in  the  Elk  Hills. 


121 

Dr.  Branner  indicated  very  clearly  that  evidence 
of  the  actual  presence  of  oil  upon  the  land  is  b}^  no 
means  necessary  to  the  determination  that  it  is  oil 
land.  He  saw  the  seepage  hereinafter  referred  to 
on  section  32  of  township  30-21,  but  apart  from  it  he 
felt  confident  of  the  unportance  of  the  lands  for  oil 
and  his  experience  with  oil  had  been  that,  if  you 
have  an  oil-yielding  horizon  or  bed  covered  over  with 
a  thick  impervious  stratum,  it  may  happen  that  the 
evidences  of  oil  itself  will  never  come  to  the  surface ; 
so  that  you  could,  in  a  region  that  was  otherwise 
favorable,  advise  companies  to  put  their  wells  down 
absolutely  regardless  of  whether  there  is  a  seepage 
or  not.  If  he  found  the  seepage  there  he  would,  as 
he  did  in  this  case,  regard  it  as  confirmatory  of  the 
other  things  (E.  1015). 

It  has  already  been  shown  that  he  testified  that  a 
geologist,  who  in  1900,  1901  or  1902  saw  the  seepages 
and  asphalt  around  McKittrick  and  the  wells  which 
had  then  been  drilled  and  who  made  some  examina- 
tion of  the  structural  formation  of  the  Elk  Hills  and 
failed  to  form  an  opinion  that  they  were  oil  in  char- 
acter and  that  there  was  an  oil  bearing  zone  under 
them  did  not  understand  his  business  (R.  1004).  It 
is  noteworthv  that  the  elements  stated  do  not  include 
evidence  of  the  actual  presence  of  oil  in  the  hills. 

There  is  no  suggestion  that  the  expert,  trained 
geologists  of  appellants  who  during  the  period  in 
question  were  exploring  these  lands  before  patent 
did  not  understand  their  business.  The  record  will 
be  invoked  later  to  show  that  they  did  and  that  they 


122 

came  to  the  conclusion  reached  by  Dr.  Branner  that 
these  lands  were  oil  lands. 

(b)  Seepages,  gas  Mow-outs,  asphaltum,  hrea 
and  oil-sands. 

The  record  contains  evidence  of  the  presence  of 
oil  sands,  seepages  and  gas  blow-onts  in  the  Elk 
Hills  and  in  the  immediate  vicinity  of  the  lands  in 
suit.  Dr.  Branner  himself  said  that  he  visited  the 
hills  in  1911  and  that  "near  the  middle  of  the  noth- 
vv^est  quarter  of  section  32  of  30-24,  about  on  an 
anticline,  are  oil  seeps"  and  that  this  ''seepage  was 
important  as  an  indication  of  what  was  under- 
neath." (R.  1015).  He  made  no  test  of  it  on  that 
occasion ;  but  it  is  hardly  to  be  assumed  that  he  could 
have  been  mistaken  as  to  what  he  saw.  He  was  so 
positive  in  his  estimate  of  the  oil  character  of  the 
lands,  based  on  favorable  structure  and  situation 
with  reference  to  the  known  presence  of  oil,  that  he 
felt  no  need  of  confirmation. 

Jno.  R.  Scupham,  who  was  consulting  engineer  to 
the  directors  of  the  Southern  Pacific  Railroad  Com- 
pany, in  1887  saw  the  seepage  in  32  of  30-24.  He 
testified  that  it  was  a  fresh  seepage  and  that  such 
indication  could  not  be  found  in  an  exhausted  oil 
sand;  that  it  was  an  active  seepage  was  not  visible 
to  the  unassisted  eye,  but  it  showed  freshness  of  the 
outflow  of  oil.  The  stain  was  a  fresh  stain.  He 
could  not  detect  actual  oil,  but  the  stain  was  neces- 
sarily recent — there  had  not  been  a  complete  evap- 
oration of  it.     (R.  597). 


123 

S.  G.  Drouillard,  whose  experience  and  qualifica- 
tions as  a  practical  oil  man  are  set  out  on  page  114 
of  the  record,  located  land  in  1899  in  the  Midway, 
Temblor,  McKittrick,  the  Buena  Vista  Hills  and  the 
Elk  Hills  (R.  114-5).  He  had  seen  oil  outcrop- 
pings  or  seepages  on  section  15  of  30-24,  the  town- 
ship next  east  of  the  lands  in  suit.  It  was  quite  a 
belt  of  sand  cropping  (R.  114).  On  the  strength  of 
these  seeps  he  and  his  associates  located  the  land.  He 
had  seen  an  oil  seep  in  section  32  of  20-24  in  1874. 
Tl^e  sand  at  that  time  luas  wet  with  oil.  It  would 
adhere  to  the  hand  when  squeezed  and  there  was  a 
prominent  smell  of  gas.  He  found  other  seeps  north 
and  west  that  he  with  his  instrument  compared  with 
that  in  32  of  30-24,  finding  that  it  would  hit  the  Elk 
Hills.  He  supposed  it  was  an  anticline  running 
southeast  and  northwest  and  parallel  with  McKit- 
trick. When  he  in  1899  visited  the  seepage  in  32  of 
30-24  with  his  associate,  Chas.  W.  Lamont,  the  sand 
was  dry.  The  foimation  was  exactly  like  the  bal- 
ance of  the  country  that  had  oil  in  it  and  the  land 
was  regarded  by  him  and  by  people  generally  as  oil 
land  (E.  116-7).  After  1874  he  visited  the  seepage 
in  32  of  30-24  "once  in  a  while"  when  riding  range, 
the  seepage  remaining  in  the  same  condition;  but  in 
1899  it  was  dry.  He  dug  about  two  feet  into  it  and 
found  the  same  sticky  stuff  observed  in  1874  (R. 
121-2).  He  showed  W.  E.  Youle  some  of  this  sand 
and  he  pronounced  it  oil  sand  (R.  122-3).  He  lo- 
cated the  land  because  of  this  seepage  and  regarded 
it  as  oil  territory.    He  found  the  anticline  on  section 


124 

5  of  30-22  north  of  McKittrick  and  an  oil  sand  crop- 
ping (R.  115,  123). 

John  Jean  in  1899  Avent  with  Chas,  W.  Lamont 
to  the  seepage  in  32  of  30-24  and  found  a  black, 
course  sand — dry  oil.  The  depth  was  about  three 
feet  and  about  one  hundred  feet  long  and  broad.  It 
looked  like  dry  oil,  burnt  sand.  He  reported  this  to 
J.  B.  Treadwell,  oil  expert  of  the  Southern  Pacific 
Company  (R.  128),  who  accompanied  him  to  see  it, 
examined  it  and  said  "it  looked  good"  (R.  127-8). 
W.  E.  Youle  told  him  that  from  the  Buena  Vista 
Lake  through  the  hills  to  the  other  hills  where  Mc- 
Kittrick is  and  from  Sunset  north  to  McKittrick 
through  that  flat  there  was  oil;  and  that,  "if  you  go 
into  the  Elk  Hills,  you  will  find  oil  an}^where  north 
of  the  line  between  Sunset  and  McKittrick." 

L.  G.  Sarnow  had  worked  for  appellants  under 
Treadwell,  their  oil  expert,  in  the  Kern  River  field 
and  at  McKittrick  in  1899  and  thereafter  as  a  dril- 
ler and  in  charge  of  the  field,  drilling  for  them 
thirty  wells  in  Kern  River  and  three  at  McKittrick 
(R.  133-4).  He  had  been  in  the  Elk  Hills  and  lo- 
cated land  there.  The  formation  is  substantially 
the  same  as  that  over  on  the  eastern  flank  of  the 
Temblor  Range,  shale,  gypsum,  and  sand.  (R.134- 
5).  Having  been  sho\ATa  some  sand  from  32  of  30-24 
by  John  Jean,  he,  Jean  and  Treadwell  went  to  the 
place  from  which  it  was  taken  which  was  apparently 
a  blow-out,  there  being  an  "anticline  that  came  to  the 
surface  in  a  way — it  was  just  the  same  as  you  would 


125 

find  in  Temblor".  He  said  that  Treadwell  was  a 
mineralogist  and  thought  "it  was  good  for  oil".  On 
the  strength  of  that  showing  Treadwell,  Jean  and  he 
located  the  land.  "With  reference  to  that  oil  sand", 
he  said,  "we  did  not  locate  just  on  the  sand.  I  re- 
member the  sand  was  on  one  side  of  it  and  we  seemed 
to  figure  that  it  came  from  McKittrick  or  Temblor 
and  we  took  the  land  that  we  thought  would  be  on  the 
strike"  (R.  135-6).  He  made  no  test  of  this  sand, 
but  did  not  need  to.  It  was  oil  and  he  did  not  think 
he  could  have  been  mistaken  (R.  141-2). 

F.  D.  Lowe  in  1900  had  heard  of  the  discovery  of 
oil  evidences  in  the  Elk  Hills — had  heard  some 
people  speak  of  the  gas  blow  out  in  32  of  30-24.  He, 
with  associates,  went  in  in  the  latter  part  of  1900 
and  looked  carefullv  over  the  land  for  anvthino;  that 
indicated  an  outcropping  of  oil  sand.  He  found 
evidences  three  hundred  yards  due  north  of  the 
northeast  corner  of  section  11  of  31-24 — what  looked 
like  oil  sand  in  a  gulch.  He  found  another  similar 
place  at  the  centre  of  section  2  of  the  same  township 
(E.  145-6).  He  found  still  another  indication  half 
a  mile  east  of  the  section  line  of  section  2.  He  said : 
"These  oil  sands  showed  stains  and  looked  as  though 
they  were  very  much  dried. ' '  He  and  his  associates 
made  locations  of  section  10  and  others  in  January, 
1901 ;  incorporated  into  a  company,  levied  an  assess- 
ment, erected  an  eighty  foot  derrick  and  let  a  con- 
tract for  drilling,  the  derrick  being  erected  at  the 
northeast  corner  of  section  11  of  township  31-24, 
about  the  place  where  he  made  the  first  discovery. 


126 

Drilling  progressed  to  five  hundred  and  sixty  feet  at 
which  point  a  small  showing  of  oil  was  discovered. 
At  various  times  gas  was  found,  which  was  piped 
and  used  for  cooking  purposes.  The  formation  was 
identicallv  like  that  he  had  seen  in  the  Kern  Elver 
field  just  before  striking  oil,  the  witness  having  been 
present  at  the  drilling  of  many  successful  producing 
wells  in  that  field  (E.  146-7).  At  the  indicated  depth 
drilling  ceased  "because  there  was  such  a  general 
depression  and  oil  got  to  be  a  drug  on  the  market  that 
we  couldn't  see  our  way  clear  to  continuing  the 
work."  In  addition  he  and  his  associates  were 
greatly  embarrassed  financially  (E.  147-8).  He  was 
certain  that  the  well  on  section  11  of  31-24  found  oil. 
"When  the  bit  would  come  up,  little  drips  of  oil 
would  break  and  run  down  in  a  streak.  I  am  cer- 
tain that  it  was  oil",  he  said  (E.  150).  At  five  hun- 
dred feet,  when  gas  was  encountered,  they  lit  a  paper 
and  dropped  it  down  the  casing  and,  when  it  had 
gone  down  a  few  feet,  there  was  a  terrific  exj)losion 
(E.  153). 

Ira  M.  Anderson  (experience  and  qualifications 
E.  153-4),  had  found  shale,  gypsum  and  oil  sands 
in  the  Elk  Hills  (E.  155).  He  found  brea  in  the 
fields  in  the  Elk  Hills.  He  made  chloroform  tests 
of  the  earth  and  rock  and  shales  found  in  the  Elk 
Hills  which  showed  oil.  Quoting  from  the  record: 
"As  to  my  opinion  as  to  whether  or  not  the  Elk 
Hills  was  oil  producing  territory,  the  formation  was 
there  to  show  that  it  was.  The  shale  is  there,  the  clay 
is  there  and  the  oil  sand  is  there.   I  found  blow-outs 


127 

in  the  Elk  Hills.  There  was  a  place  across  from 
Miller  &  Lux'  headquarters  where  the  gas  blew  out" 
— eight  or  nine  miles  south  and  west  from  the  head- 
quarters, on  the  east  side  of  the  summit  line  of  the 
Elk  Hills,  pretty  near  the  top  of  the  ridge  (E.  156). 

Chas.  H.  Allison,  appellants '  witness,  corroborated 
the  testimony  of  F.  D.  Lowe  that  he  found  gas  in  his 
well  in  the  Elk  Hills,  Allison  having  furnished  him 
with  a  gas-head  with  which  to  retain  the  gas  and 
pipe  it  to  the  cook  shanty  (R.  2002). 

David  Kinsey,  another  of  appellants'  witnesses, 
also  corroborated  Allison  both  as  to  the  finding  of 
gas  and  as  to  the  cause  of  the  cessation  of  work  (R. 
1801). 

F.  J.  Sarnow  (E.  164)  had  seen  oil  crops  and  sand 
in  the  Elk  Hills  on  section  14  of  30-22  on  the  east  side 
of  the  railroad  and  drv  oil  and  overflow  on  the  west 
side  of  the  wagon  road.  At  other  places  he  saw 
several  different  spots  where  there  were  oil  crops — 
four  or  five  outcroppings  of  sands  in  the  Elk  Hills. 
He  knew  of  oil  sands  in  the  hills  southwest  of  Mil- 
ler &  Lux'  ranch  about  section  25  of  30-23  and  sec- 
tion 30  of  30-24  (R.  169).  The  anticline  that  nms 
through  the  Elk  Llills  is  that  which  goes  through 
section  6  of  30-22  on  which  section  he  had  drilled 
three  producing  wells  (R.  173-4). 

M.  S.  Wagy  located  lands  for  oil  in  the  Elk  Hills 
in  1899-1900.  He  found  in  section  32  of  30-24  dead 
sand  that  had  the  odor  of  oil.     It  was  oil  sand 


128 

stained  black  (R.  175-6).  He  located  lands  in  30-23 
and  in  30-24.  He  used  to  throw  on  the  fire  the  de- 
posit that  he  found  there  which,  when  it  became 
heated,  would  blaze  up  and  give  an  odor  of  oil  or  gas 
(E.  177-8).  Near  his  locations  in  the  Elk  Hills 
shafts  were  later  on  dug  by  other  parties  twenty 
feet  which  exposed  indications  of  oil  (R.  178).  Wit- 
ness regarded  the  Elk  Hills  as  oil  territory  because 
they  contained  better  indications  than  the  Kern 
River  field,  where  they  were  then  getting  oil  (R. 
180).  There  was  an  outcropping  on  section  26  of 
30-23  (R.  181). 

B.  K.  Lee  (qualifications,  R.  224)  found  asphalt 
on  section  11  of  30-22,  saying  that  on  the  north 
flank  of  the  anticline  on  this  section  there  is  a  bed 
of  coarse  gravel  and  that,  while  a  superficial  exami- 
nation showed  nothing  but  yellow  gravel,  yet,  when 
it  was  broken  into,  it  was  found  covered  with  dry 
oil.  He  also  found  an  oil  seepage  on  section  2  of 
31-23  (R.  225). 

J.  I.  Wagy  and  associates  made  locations  prior  to 
patent  ''all  over  the  Elk  Hills"  in  30-23,  31-23  and  31- 
24  (R.  238-9).  In  1900  he  discovered  in  a  canyon  in 
the  Elk  Hills  a  seepage  that  seemed  to  be  an  oil  seep- 
age, very  much  like  the  seepages  he  had  seen  in  the 
Sunset  district.  He  made  his  discovery  known  to  H. 
A.  Blodgett,  of  the  firm  of  Jewett  &  Blodgett,  large 
oil  and  asphalt  operators,  who  sent  their  superintend- 
ent, W.  E.  Youle,  with  the  witness  to  examine  it. 
This  seepage  was  on  section  32  of  30-24  and  on  the 


129 

strength  of  it  witness  in  conjunction  with  Jewett  and 
Bloclgett  located  the  land  (R.  242),  the  locations 
including  the  top  of  the  Elk  Hills  and  extending  as 
far  west  from  32  of  30-24  as  the  Elk  Hills  them- 
selves extended  (R.  243-4).  These  locations  were 
kept  up  for  several  years  (R.  253-255).  Reloca- 
tions were  made  and,  says  the  witness,  "we  had  to 
go  out  there  at  12  o'clock  at  night  and  lay  in  the 
sage-brush  and  pretty  near  freeze  to  death  'till  12 
o'clock  and  then  see  if  we  could  beat  the  other 
fellow  to  it."  (R.  254).  He  had  not  renewed  the 
location  since  the  lands  were  withdrawn  September 
27,  1909  (R.  255). 

S.  P.  Wible  before  patent  heard  of  the  seepage  on 
32  of  30-23,  but  did  not  see  it  until  afterwards.  He 
said:  "It  is  not  what  you  call  an  oil  seepage;  it  is 
what  you  would  call  a  brea  bed.  Evidently  oil  or  gas 
had  been  in  it  at  one  time  and  dried  out  at  the 
present  time."  (R.  318-19).  He  stated  that  all  the 
south  half  of  30-23,  the  specific  lands  in  suit,  lie  in 
the  Elk  Hills  right  over  the  crest  and  west  of  the 
oil  croppings  in  32  of  30-24  (R.  320).  He  further 
testified  that  there  is  a  decided  oil  showing  in  what 
he  would  call  the  north  extension  of  the  Elk  Hills 
beyond  the  railroad  to  the  west,  consisting  of  "oil 
sand  crops  in  a  number  of  places"  and  that  as  early 
as  1901  and  before  1903  there  were  two  oil  wells  on 
section  6  of  30-22  and  one  on  section  1  of  30-21, 
these  wells  being  on  the  Elk  Hills  anticline.  (See 
exhibit  157). 


130 

Charles  Brisco  (R.  334-5)  about  1901  or  1902 
found  a  small  brea  bed— dried  oil— dried  asphaltum 
— in  the  Elk  Hills  on  the  east  slope  about  twelve  or 
fifteen  miles  south  and  east  of  McKittrick.  He  re- 
ported it  to  several  people  and  prior  to  1901  took 
Josiah  Owen,  appellants'  geologist,  to  see  it  (R. 
335).  It  consisted  of  dry  dirt  and  asphaltum  mixed 
together  and  would  burn.  Owen  explained  to  him 
that  it  was  a  fissure  that  had  been  blown  out  there. 
There  was  dried  oil  there — that  is,  it  was  dried  in 
the  dirt  and  shale  (R.  339-40).  Owen  said  to  him: 
''This  is  good  enough,  my  boy;  hang  on  to  it."  (R. 
341).  The  witness'  experience  had  been  that,  when 
you  find  brea,  "it  is  an  indication  that  there  is  an 
oil  belt  there  or  near  there  somewhere  and  it  has 
been  oozed  out  there  by  the  gas".  (R.  341).  He  be- 
lived  oil  to  be  in  the  Elk  Hills  "by  reason  of  the 
contiguity  to  proven  territory."     (R.  342). 

W.  G.  Sylvester  in  1899  found  evidence  of  oil  in 
the  Elk  Hills.  His  party  was  out  to  locate  oil  lands 
and  started  from  the  Headquarters  Ranch.  They 
had  gone  into  the  hills  several  miles  when  he  saw 
indications  of  what  he  would  call  asphaltum,  though 
he  did  not  remember  on  what  section.  It  was  pos- 
sibly four  or  five  miles  west  and  possibly  a  little 
south  of  Headquarter 's  Ranch.  He  found  a  rather 
recent  oil  seepage  which  was  somewhat  dried  out, 
but  would  burn,  giving  off  an  odor  like  coal  oil  or 
gasoline.  He  found  this  seepage  in  a  gulch  and  also 
found  asphalt  high  up  on  the  hills  (R.  355-6).  His 
party  made  many  locations  in  30-23,  30-24,   31-23 


131 

and  31-24.  In  1901  the  Empire  Oil  &  Development 
Company,  of  which  this  witness  was  the  heaviest 
owner,  drilled  a  well  on  section  8  of  30-23  to  a  depth 
of  980  feet.  That  well  was  abandoned  in  1901  be- 
cause there  was  so  much  gas  that  the  drilling  be- 
came so  expensive  that  they  "couldn't  stand  the 
pressure  and  had  to  quit"  (R.  356-7-8). 

J.  W.  Kaerth  assisted  in  the  goverimient  survey  of 
30-23,  the  camp  being  on  section  33.  He  found  as- 
phaltum  reefs  which  showed  up  along  the  summit  in 
a  number  of  places.  His  party  removed  some  por- 
tions of  these  reefs  and  came  to  do  this  in  the  fol- 
lowing way :  they  wanted  rocks  with  which  to  mark 
corners  and,  thinking  these  reefs  rock  ledges,  sent 
the  camp  man  out  to  get  some  of  them.  When  he 
came  back,  he  reported  that  they  were  not  rocks  at 
all,  but  tar.  The  witness  then  examined  and  found 
they  were  cakes  of  asphalt.  The  party  thereafter 
used  it  for  camp  fuel  (R.  417-8).  He  remembered 
two  or  three  oil  seepages  on  the  lands — what  ap- 
peared to  be  oil  seepages  (R.  418).  In  the  report  of 
the  survey  the  lands  were  characterized  as  mineral, 
such  characterization  being  based  upon  what  was 
seen,  viz.,  the  asphaltum  reefs  and  oil  seeps  (R. 
423). 

H.  P.  Dover  in  1903  or  1904  found  ''a  kind  of  a 
blow-out  in  a  large  gulch"  in  30-23  ''which  showed 
indications  of  oil  on  both  sides" — discolored  clay  and 
some  sand.  In  his  opinion  it  showed  a  stain  of  oil. 
He  detected  oil  "a  little  with  ether."    This  was  in 


•I 


132 

the  Elk  Hills,  he  was  positive.  The  formation  he 
thought  favorable  for  oil  (R.  461).  In  1903  or  1904 
he  went  into  the  Elk  Hills  for  the  purpose  of  locat- 
ing oil  lands ;  but  he  had  been  in  there  on  numerous 
occasions  before  that— he  had  worked  stock  there 
for  Miller  &  Lux  (E.  463).  The  little  seepage  in 
section  23  of  32-23,  which  he  first  saw  in  1901,  "was 
not  like  the  seepage  in  32  in  the  Elk  Hills.  There 
was  oil  in  32  oozing  out  of  the  groimd."     (R.  467). 

Colon  F.  Whittier  (for  qualifications  and  experi- 
ence see  R.  469)  testified  that  there  is  asphaltum 
showing  in  the  railroad  gap — section  14  of  30-22 — , 
some  oil  sands — dry  oil.  The  shales  around  Mc- 
Kittrick  and  those  in  the  Elk  Hills  are  practically 
the  same  (R.  469). 

Charles  F.  Haberkern  knew  of  and  visited  the  oil 
showing  or  outcrop  on  32  of  30-24  in  1904  and  it 
looked  good  enough  to  cause  him  to  locate  the  land 
there  (R.  350). 

Frank  Barrett  (for  qualifications  and  experience 
see  R.  478-9)  first  visited  the  Elk  Hills  in  1899  and 
found  two  or  three  places  where  there  had  been 
seepages.  He  took  some  of  the  outcroppings  home 
with  him.  From  the  smell  one  could  just  get  a 
little  odor  of  oil;  but,  when  he  applied  the  chloro- 
form test,  he  got  traces  of  oil.  It  was  not  asphalt- 
uni— it  was  oil.  He  would  not  be  positive,  but 
thought  it  was  section  17  of  30-24.  It  was  in  30-24 
near  section  23.  He  found  the  formation  in  the  Elk 
Hills,  around  McKittrick  and  at  Taft  and  Maricopa 


133 

similar  (R.  479-80).  He  believed  the  lands  in  suit 
reasonably  ^YO^th  $200.00  to  $300.00  an  acre  as  oil 
lands  (R.  481).  He  found  some  three  or  four  seep- 
ages where  oil  had  seeped  out  and  caked.  All  of  the 
lighter  properties,  of  course,  had  evaporated.  There 
was  one  blow-out  that  he  saw  that  was  a  live  seepage 
with  actual  oil  coming  out  of  it.  It  was  not  in  the 
Buena  Vista  Hills— it  was  in  the  Elk  Hills  (R.  483). 

N.  C.  Farnum  (R.  493)  made  a  detailed  examina- 
tion of  the  Elk  Hills  in  1899.  He  rode  over  "the 
whole  hills"  pretty  thoroughly,  making  a  very  thor- 
ough investigation  looking  for  oil  sands  that  might 
crop  out  or  gypsum — anything  in  the  way  of  material 
upon  which  to  base  a  location.  He  went  to  a  place 
indicated  by  his  guide  which  he  later  found  was  sec- 
tion 32  of  30-24.  There  he  found  evidence  enough 
that  "there  had  some  time  been  some  oil  in  this  piece 
of  ground  on  the  surface."  It  was  in  a  canyon  and 
extended  quite  a  distance  down  the  canyon  from 
what  is  often  termed  the  blowout  or  gas  fissure  (R. 
494-5).  The  witness  tested  the  sand  and  found  that 
it  had  been  saturated  with  oil  (R.  496).  He  found 
evidence  of  waste  oil  in  the  railroad  gap  in  14  of  30- 
22— dry  oil  in  the  sand  (R.  496). 

Parker  Barrett  (R.  523),  who  located  the  ground 
on  which  the  famous  Lake  View  gusher  was  drilled, 
as  well  as  lands  in  the  Elk  Hills,  knew  of  an  oil  seep 
in  section  32  of  30-24  in  those  hills.  That  seepage 
assisted  him  to  the  conclusion  that  the  lands  were 
good  oil  lands,  although  he  had  determined  that  such 


134: 

was  the  case  before  lie  visited  it.  He  had  heard  of 
the  seepage  many  years  (R.  523-4)  and  had  talked 
with  geologists,  including  Fairbanks,  Ochsner  and 
Owen.  He  also  testified  to  the  presence  in  the  rail- 
road gap  in  section  14  of  30-22  in  the  Elk  Hills  of 
asphaltum  beds  or  brea  (R.  524-5). 

F.  Oskar  Martin,  an  expert  for  the  government, 
testified  that  he  found  an  oil  seepage  on  32  of  30-24 
situated  near  a  point  at  which  the  anticline  had  been 
somewhat  deflected,  giving  the  hydrocarbons  a  chance 
to  exude  to  the  surface;  and  that  the  existence  of 
that  seepage  was  plain  evidence  to  him  that  the  lands 
must  be  underlaid  by  petroliferous  deposits  (R. 
613). 

W.  E.  Youle  (qualifications  and  experience,  pages 
of  record  540-1-2-3-4)  stands  out  upon  this  record 
as  the  practical  oil  man  of  the  greatest  experience 
and  success  of  all  the  witnesses  who  were  called. 
He  saw  oil  sands  in  the  Elk  Hills  in  1898  and  made 
for  his  employers  locations  based  upon  his  personal 
observation  of  the  lands.  He  made  chloroform  and 
fire  tests  of  the  oil  sands  which  he  found  in  the  Elk 
Hills  and  the  result  showed  bituminous  matter  and 
gases.  The  land  was  full  of  gas,  "It  was  burned 
with  gas  all  over."  This  was  evidence  of  a  very  vol- 
atile oil  without  much  asphalt  base  (R.  551-2). 
(When,  as  will  be  shown  later,  a  subsidiary  of  the 
Southern  Pacific  Company  drilled  wells  in  the  Elk 
Hills,  it  found,  as  Youle  had  predicted,  "a  very  vola- 
tile oil  without  much  asphalt  base" — indeed,  oil  of 


135 

the  high  gravity  of  39  degrees  Baume — a  phenome- 
nally light,  volatile  oil  for  California.)  Yonle  saw  oil 
sand  near  the  summit  of  the  Elk  Hills.  (R.  573). 
On  two  or  three  different  days  he  got  samples  over 
a  distance  of  a  mile  or  more— got  some  in  a  gulch 
and  some  on  the  hills.  He  found  no  asphaltum,  but 
sands  percolated  so  much  that  you  could  put  them 
on  a  fire  shovel,  heat  them  a  little  and  they  would 
blaze ;  and  in  making  the  chloroform  test,  you  could 
get  particles  of  oil.  He  stated  emphatically  that 
"you  could  get  oil"  from  the  territory  he  examined 
on  those  occasions  (R.  574).  He  found  through  the 
Elk  Hills  many  evidences  of  gas,  shown  by  the  pe- 
culiar look  of  formation  that  had  been  attacked  by 
gas — a  grayish  color,  a  glassy  appearance  which 
manifests  itself  when  gas  is  escaping.  At  one  or  two 
places  over  near  the  apex  he  put  a  can  over  it  and  let 
it  accumulate  and  then  lit  it  (R.  574-5).  The  gas 
did  not  come  through  water — that  was  evident.  Its 
occurrence  was  an  indication  of  oil.  The  gas  which 
he  found  was  not  marsh  gas  (R.  575).  He  would 
have  advised  any  company  to  spend  one  hundred 
thousand  dollars  to  develop  these  lands  and  the  only 
reason  his  employers  did  not  do  so  was  because  of 
the  scarcity  of  money,  the  low  price  of  oil  and  lack 
of  transportation  facilities  (R.  577). 

Robt.  E.  Graham,  a  witness  for  appellants,  had 
seen  the  deposit  in  32  of  30-24  and,  while  he  could 
not  sav  what  it  was,  said  ''there  are  two  or  three 
places  dug  out  there  and  it  looks  as  though  it  might 
have  been  at  one  time  oil  sand."    (R.  2135-6). 


136 

Chas.  W.  Lamont  (qualifications  and  experience, 
pages  579-80  of  the  record)  went  in  the  Elk  Hills  in 
1899  and  located  lands  with  Drouillard  and  others. 
They  took  up  some  of  the  shale  and  sand  at  the 
blow-out  on  32  of  30-24 — decomposed  shale  and  oil 
sand,  the  shale  being  too  hot  to  handle  pleasantly. 
On  the  north  and  along  the  line  of  contact  from  Mc- 
Kittrick  towards  Sunset  right  close  to  the  lake  they 
saw  live  oil  coming  out  of  the  ground,  floating  in  the 
mud  and  water,  towards  the  easterly  and  northerly 
end  of  the  Elk  Hills  (R.  580-1).  He  also  saw  what 
looked  like  oil  sand  and  brea  on  section  14  of  30-22 
at  the  west  end  of  the  Elk  Hills  anticline  (R.  581). 

L.  E.  Doan,  a  witness  for  appellants,  testified  to 
out-croppings  of  oil  sands  on  sections  26,  22,  16  and 
15  of  30-23  extending  three  miles  (R.  2074).  He 
also  went  to  the  seepage  on  32  of  30-24  in  1902  with 
Farnum  (R.  2074). 

As  showing  the  general  notoriety  of  the  seepage 
on  32  of  30-24,  the  following  evidence  from  appel- 
lants' own  witnesses  is  referred  to: 

E.  J.  Miley  testified  that,  while  he  had  never  seen 
the  seepage  in  question,  he  had  heard  of  it  several 
times  and  as  early  as  1901  or  1902  (R.  1742). 

Chas.  H.  Allison  saw  specimens  of  sand  from  out- 
croppings  in  30-23  and  believed  in  the  oil  character 
of  the  lands  as  prospects.  Several  of  his  co-locators 
went  into  the  hills  and,  after  examination,  returned 
and  brough  with  them  and  showed  him  numerous 


137 

specimens  of  bituminous  rock  and  asphaltum 
which,  when  a  match  was  applied,  burned.  The  con- 
text shows  that  this  was  prior  to  1904  (R.  2001-2). 

E.  K.  Howk  had  heard  of  the  gas  blow  out  in  the 
early  days  in  the  Elk  Hills,  but  never  went  to  see  it 
(R.  1844). 

B.  M.  Howe  heard  of  an  extensive  oil  outcrop- 
ping or  gas  blow-out  in  section  32  of  30-24  (R.  1906). 

Chas.  T.  Burks  heard  of  it  (R.  2067). 

Now,  it  is  true  that  three  of  appellants'  experts, 
Ochsner,  Anderson  and  Taff,  all  in  their  employ  as 
geologists,  expressed  the  opinion  that  the  outcrop- 
ping of  sand  or  seepage  on  32  of  30-24  is  not  an  oil 
seepage,  Ochsner  saying  that  he  saw  it  in  1909  and 
that  it  was  an  occurrence  of  organic  material  (R. 
2173),  as  if  oil  were  not  organic;  but  from  the  ex- 
amination which  he  then  made  of  them  he  concluded 
that  the  Elk  Hills  may  have  small  scattering  amounts 
of  light  oil.  He  did  not  burn  any  of  it  or  test  it  with 
chloroform  (R.  2215).  He  first  formed  an  opinion 
of  the  Elk  Hills  as  a  possible  or  probable  oil  bearing 
territory  as  the  result  of  his  work  in  the  fall  of  1907 
(R.  2203). 

F.  M.  Anderson  first  saw  the  gas  blow-out  or 
seepage  on  32  of  30-24  in  November,  1912,  when  sent 
out  to  examine  the  lands  in  suit  by  way  of  prepara- 
tion to  testify  as  an  expert  in  this  case  (R.  2589). 
His  opinion  was  that  it  was  a  gas  seepage — hydro- 


138 

carbon  gas  and  partly  sulphuretted  hydrogen  gas — • 
methane  or  marsh  gas  (R.  2475-6).  He  said  that  he 
tested  the  sandv  material  with  benzine,  chloroform 
and  other  reagents  (R.  2476-7)  and  reached  the  con- 
clusion that  the  tests  were  entirely  negative.  He, 
therefore,  expressed  the  opinion  that  the  deposits 
were  neither  oil  seepages  nor  asphaltum.  Asked  by 
counsel  for  appellee  whether  they  were  petroleum 
gas  blow-outs,  he  answered:  "I  can't  say  that  they 
are  and  I  do  not  believe  that  thev  are":  thus  refus- 
ing  to  commit  himself  to  the  proposition  that  they 
are  not  (R.  2478-9).  This  is  particularly  significant 
in  view  of  the  fact  that  he  had  already  pronounced 
the  deposit  a  hydrocarbon  gas  blow-out;  for,  as  is 
well  known,  petroleum  gas  is  a  mixture  of  hydro- 
carbon gases. 

J.  A.  Taff,  while  agreeing  with  Anderson  in  the 
main,  disagreed  with  his  view  that  this  deposit  was  a 
gas  blow-out  (R.  2843-4).  He  admitted  that  he  did 
not  even  know  the  formula  for  methane  or  marsh  gas 
and  that  he  was  not  a  chemist  (R.  2837).  He  did  not 
know  what  ethane  is  nor  propane  nor  whether  they 
are  constituents  of  petroleum;  but  stated  that  it 
was  his  understanding  that  methane  or  marsh  gas 
constituted  from  seventy  to  ninety-eight  per  cent 
natural  gas  (R.  2837-8)  ;  so  that  Anderson's  opinion 
that  the  gas  in  the  seepage  in  question  was  methane 
(R.  2475)  amounts  to  a  practical  admission  that  it 
was  petroleum  gas. 

It  is  most  manifest  that  the  foregoing  recital  of 
the  evidence  concerning  the  existence   in  the   Elk 


139 

Hills  of  evidences  of  oil  is  convincing  that  such  evi- 
dences do  exist  and  that  they  were  generally  known 
prior  to  the  date  of  the  assailed  patent.  Such  men 
as  Drouillard,  Youle  and  others,  practical  and  ex- 
perienced as  they  were  in  all  of  the  phases  of  the  oil 
business,  could  not  have  been  mistaken.  Thev  saw 
these  evidences  and  handled  and  tested  them.  Dr. 
Branner  could  not  have  been  "taken  in"  bv  them. 
When  in  1874  Drouillard  saw  it,  "the  sand  at  that 
time  was  wet  with  oil",  he  declared.  Youle  and 
others,  long  before  Anderson  or  Taff  went  near  it, 
tested  it  with  chloroform  and  found  oil  in  it.  From 
1874  to  Anderson's  visit  in  1912  thirty-eight  years 
had  gone  by.  Neither  of  them  is  shown  or  appears 
to  be  better  qualified  than  Youle  to  make  the  chloro- 
form test  and  their  argumentative  testimony  throws 
no  suspicion  upon  the  accuracy  of  the  tests  that  had 
been  made  by  others  or  of  the  existence  of  the  oil 
which  they  saw.  Especially  is  this  true  in  the  light 
of  the  admission  of  Anderson,  Taff  and  Ochsner 
that  they  conceded  the  presence  in  the  Elk  Hills  of  a 
light,  volatile  oil.  This  is  the  very  kind  of  oil  which 
Youle  said  he  expected  to  find  there  and  which  was 
later  found  in  the  wells  drilled  by  the  Associated  Oil 
Company,  a  subsidiary  of  the  Southern  Pacific 
Company.     (Exhibits  9-D  and  9-0). 

Appellants  extended  themselves  in  vain  to  destroy 
the  evidence  of  the  existence  of  seepages  and  blow- 
outs in  the  lands  in  suit  and  immediately  around 
them  because  of  their  recognition  of  the  completion 
by  it  of  the  strict  parallel  between  the  facts  of  this 


140 

case  and  those  of  the  Diamond  Coal  and  Coke  Com- 
pany case.  In  the  latter  there  were  the  outcrop  on 
the  one  side,  the  dip  away  from  it  towards  the  lands 
in  suit  and  the  occurrence  of  coal  on  the  other  side 
of  the  lands.  Here  we  have  the  long  line  of  seepages 
and  many  wells  to  the  west  of  the  lands  in  suit,  the 
dip  of  the  oil  strata  towards  the  lands  in  suit  and  the 
proven  presence  of  oil  on  the  other  side  of  the  lands. 
The  known  conditions  in  the  one  case  are  therefore 
in  pari  passu  with  the  known  conditions  in  the 
other.  Indeed,  while  the  seepage  in  32  of  30-24  is 
beyond  the  lands  in  suit,  the  foregoing  evidence 
proves  the  existence  on  the  lands  themselves  of  brea, 
asphaltum  and  gas  blow-outs,  so  that  this  is  a  plainer 
case  than  the  Diamond  Coal  and  Coke  Company 
case,  since  there  there  was  no  evidence  whatever  of 
an  exposure  of  coal  on  the  lands  in  suit. 

If,  therefore,  the  question  were  now  of  first  im- 
pression and  for  this  court  initially  to  pass  on,  the 
evidence  is  overwhelming  that  there  were  generally 
known  seepages,  gas  blow-outs,  brea  and  asphaltum 
in  the  Elk  Hills.  Since  it  has  alreadv  been  resolved 
by  the  trial  court  in  favor  of  the  government,  it 
would  be  difficult  to  conceive  upon  what  principle 
appellants  can  now  urge  that  Judge  Bean's  finding 
is  without  substantial  support  in  the  evidence  oi 
that  it  is  palpably  or  manifestly  wrong. 

The  Government's  expert,  Veatch,  said  the  last 
word  upon  this  subject.  He  testified  with  reference 
to  the  seepage  of  32  of  30-24  that  he  examined  it 
twice  and  found  a  stained  sand  exposed  at  intervals 


141 

for  several  hundred  feet.  This  sand  contams  some 
sulphur.  Tested  with  chloroform  it  gave  no  oil.  The 
sand  shows  particles  of  carbon  and  it  was  his  con- 
clusion that  it  represents  an  escape  of  gas  from  the 
oil  bearing  zone,  the  gas  carrying  some  oil  with  it; 
that  this  oil  has  been  deposited  in  the  sand  together 
with  sulphur  coming  from  the  gas  and  has  been  fired 
— the  gas  has  been  lighted — ;  and  that,  owing  to  in- 
complete combustion,  a  little  carbon  has  been  left  in 
the  sand,  this  fact  making  it  probable  that  any  one 
or  more  persons  in  the  past  could  have  tested  it  and 
gotten  positive  results  of  oil  before  it  was  burned 
out.  It  was  probably,  he  said,  a  volatile  oil  (in 
which  he  agrees  with  Anderson,  Oschner,  Taff  and 
Youle)  that  would  evaporate.  If  there  were  other 
earth  movements,  it  would  be  possible  to  get  a  posi- 
tive test  of  oil  (R.  712-3). 

Thus,  Veatch  agrees  with  Anderson,  Oschner  and 
Taff  that  there  is  no  oil  there  now  and  explains  how 
its  absence  now  is  reconcilable  with  its  presence 
when  Drouillard  and  Youle  tested  it  and  found  oil. 
The  evidence  shows  that  it  was  frequently  set  on 
fire  by  persons  examining  it,  thus  explaining  the 
cause,  while  the  preseiice  of  the  particles  of  carbon 
demonstrates  the  result. 

(c)   The  significance  of  seepages,  aspJialtum, 
brea  and  hlotv-otits. 

The  presence  of  seepages,  asphalt,  brea  and  gas 
blowouts  needs  little  comment.  Their  significance  is 
patent.    They  do  no  less  than  prove  the  presence  in 


142 

the  lands  in  suit  of  oil.    W.  E.  Youle  foreclosed  this 
question  in  these  words: 

"You  show  me  an  oil  seepage  with  a  proper 
development  and  I  will  show  you  an  oil  field; 
and,  if  you  can  find  any  instance  it  is  not  so,  it 
is  something  I  don't  know  of.  From  my  experi- 
ence in  the  California  fields,  I  will  say  that  such 
an  oil  sand  indication  is  alwaj^s  an  indication  of 
the  presence  of  oil  in  paying  quantities.  I  make 
tliis  statement  unqualifiedly  and  I  know  of  no 
exception  to  it  whatever"  (R.  556). 

Even  if  it  were  conceded  for  purposes  of  argument 
that  all  of  the  many  witnesses  who  testified  that  they 
tested  the  deposit  in  32  of  30-24  and  found  oil  were 
mistaken  and  that  the  tests  made  by  Anderson  and 
Oschner  in  1912  proved  not  only  that  there  was  no 
oil  there  then  but  that  none  had  ever  been  there,  it 
would  none  the  less  remain  that  in  1904,  prior  to 
patent,  this  was  generally  regarded  as  an  oil  seepage 
and  hence  an  evidence  of  the  presence  of  oil  in  which 
many  experienced  oil  men,  including  Youle,  the 
principal  expert  of  that  day,  and  Blodgett,  the 
largest  operator  at  that  time  ,and  even  Josiah  Owen, 
appellants'  own  trained,  experienced  geologist,  be- 
lieved and  upon  which  they  relied  to  the  extent  that 
on  account  of  it  they  made  locations.  This  being 
true,  it  must  be  conceded  that  it  constituted  one  of 
the  "Known  Conditions"  which  appellants  were 
under  the  duty  of  considering;  and  that  they  had 
notice  of  it  and  believed  in  it  follows  from  what  has 
been  shown  concerning  the  examination  of  it  by 
Owen  and  his  estimate  of  it.  If  Owen  believed  it 
proof  of  the  presence  of  oil,  it  was  appellants'  duty 


143 

to  make  this  known  to  the  Government  and  their 
failure  to  do  so  can  only  be  explained  upon  the 
theory  that  they  knew  that  to  do  so  would  defeat 
their  purpose  to  obtain  patent  to  the  lands  in  suit. 
Undoubtedly  the  seepage  of  32  of  30-24  and  in  14  of 
30-22  were  a  part  of  the  "known  conditions"  which 
were  such  as  to  engender  and  did  engender  the  belief 
that  these  lands  were  oil  lands;  and,  while  the  Gov- 
ernment is  far  from  conceding  that  the  overwhelm- 
ing evidence  of  their  true  character  as  oil  seepages 
is  even  questionable,  as  elements  of  the  "known  con- 
ditions" at  the  time  of  patent  nothing  would  be 
taken  from   either  their   significance  or   probative 
force  upon  the  question  of  fraud  if  it  were  to  be  now 
demonstrated  that  the  many  witnesses  were  deceived. 
If  partly  on  account  of  their  reliance  or  belief  in 
these  then  accepted  evidences  of  the  oil  character  of 
the  lands  appellants  fraudulent!}"  sought  and    ac- 
quired patent  to  lands  interdicted  by  the  terms  of 
the  grant,  it  does  not  lie  in  their  mouth  to  say  now 
that  they  were  mistaken  and  that,  being  mistaken, 
they  ought  not  to  be  penalized  for  their  successful 
fraud.    Can  it  be  doubted  that,  if  instead  of  filing  an 
affidavit  that  the  lands  were  non-mineral  agricultural 
lands,  they  had  made  known  to  the  government  their 
belief  and  the  general  belief  in  the  existence  in  the 
Elk  Hills  of  oil  seepages  or  oil  sands,  no  patent 
would  have  issued  and  the  occasion  for  this  suit 
never  have  arisen? 

Finally,  appellants'  leading  expert,  F.  M.  Ander- 
son, though  he  did  not  see  this  seepage  until  1911, 


144 

saw  and  examined  in  1903  and  1908  a  similar  deposit 
in  the  Buena  Vista  Hills  and  at  both  times  believed 
and  reported  it  to  be  asphaltum.  These  deposits  in 
the  Bnena  Vista  Hills,  he  stated,  differed  from  that 
in  32  of  30-24  in  the  Elk  Hills  "chiefly  in  quantity 
and  magnitude  of  outcrop";  so  that  it  follows  that, 
if  in  1903  or  even  as  late  as  1908  he  had  seen  the 
seepage  in  32  of  30-24,  he  would  have  taken  it  to  be 
asphaltum  (E.  2478-9). 

(d)   The  significance  of  oil  sands. 
Said  appellants'  expert  and  geologist,  Oschner: 

"A  cropjDing  of  oil-sand  is  a  beginmng  of  first- 
hand evidence  that  petroleum  is  present  in  the 
neighborhood  and  it  is  the  first  step  in  the  study. 
It  would  call  forth  the  first  suspicion,  the  first 
interest.  A  cropping  of  oil  sand  which  shows 
unmistakable  evidence  of  having  been  impreg- 
nated b.y  petroleiun  or  bituminous  matter  is 
absolute  evidence  to  the  mind  of  any  competent 
geologist  that,  if  oil  does  not  exist  in  that  fomia- 
tion  now,  it  must  have  existed  at  some  time  in 
the  past.  That  is  unequivocallv  true."  (R. 
2212.) 

Eobeii:  E.  Graham,  another  of  appellants'  wit- 
nesses, a  practical  oil  man,  said  that,  if  in  the  Elk 
Hills  he  had  found  well  defined  sand  and  taken  that 
together  with  the  natural  geological  structure  of  the 
hills,  he  would  have  regarded  it  as  a  good  indication 
of  oil  territory.    (R.  2136.) 

E.  W.  Kay,  yet  another  of  appellants'  witnesses, 
testified  that  in  1901  an  outcropping  of  sand  in  the 
Elk  Hills  would  have  been  a  conclusive  indication  of 
the  oil  character  of  the  land.     (R.  2086.) 


145 

B.  M.  Howe,  a  witness  for  appellants,  testified 
that,  in  passing  on  the  question  of  whether  given 
land  was  oil  territory,  he  would  look  for  outcrop- 
pings  of  sand  (E.  1901-2). 

W.  E.  Youle  said:  "In  California  the  existence  of 
oil  sands  is  always  a  good  indication  of  finding  oil  in 
paying  quantities. "    (E.  556.) 

And  so  the  recital  of  the  testimony  might  be  pro- 
longed to  show  the  value  and  faith  placed  in  the 
presence  of  oil  sands  as  indicative  of  the  oil  charac- 
ter of  lands.  Since,  however,  there  is  no  dissent 
upon  this  proposition,  the  government  is  content  to 
rest  upon  what  has  already  been  cited  from  one  of 
its  own  witnesses,  Youle,  and  appellants'  witnesses, 
Ochsner,  Graham,  Kay  and  Howe,  it  being  merely 
illustrative  of  what  is  shown  with  great  distinctness 
and  in  various  ways  by  the  record. 

(e)     Knowledge  of  Tread  well  and  Owens. 

Finally,  emphasis  is  placed  upon  the  evidence 
showing  knowledge  of  the  existence  of  these  oil  indi- 
cations of  two  of  appellants'  servants,  Treadwell  and 
Josiah  Owen. 

Treadwell  from  1893  to  1903  had  charge  of  the 
development  and  production  of  oil  for  appellants 
(E.  424).  It  was  upon  his  recommendation  that 
lands  of  the  Southern  Pacific  Eailroad  Company 
were  withheld  and  withdrawn  from  sale  because  of 
their  oil  character  (E.  426-7).    In  1900  and  1901  he 


146 

was  "working  up  the  McKittrick  district,  determin- 
ing the  strike  of  the  anticlinal  and  the  oil  deposits 
on  the  outcrop"  (R.  3420).  He  acted  under  the  or- 
ders of  H.  E.  Huntington,  the  direct  representative 
of  C.  P.  Huntington,  Julius  Kruttschnitt  and  E.  H. 
Harriman  (E.  424).  John  Jean  reported  to  him  the 
seepage  in  32  of  30-24  and  he  and  Treadwell,  together 
Avith  L.  G.  Sarnow,  went  to  see  it  in  1899.  Treadwell 
said  it  looked  good  and  on  the  strength  of  it  Tread- 
well, Sarnow,  Jean  and  others  located  the  land  (R. 
128),  Treadwell  admitting  that  he  made  out  the 
notices  and  placed  on  them  the  names  of  himself  and 
seven  others,  all  save  one  of  whom  were  related  to 
him  (E.  3426).  He  told  F.  J.  Sarnow  that  he 
thought  there  was  oil  in  the  Elk  Hills  (R.  165)  and 
admitted,  when  testifying,  that  he  believed  in  1899 
that  they  were  mineral  lands.    (E.  3427.) 

Josiah  Owen,  who  took  charge  of  the  field  as 
geologist  for  appellants  in  1903,  spoke  several  times 
with  S.  P.  Wible  about  the  seepage  in  32  of  30-24 
(R.  321).  Chas.  Briscoe  took  him  into  the  Elk  Hills 
to  a  place  where  there  Avas  "oil  oozed  up  and  dried 
in  the  dirt  and  shale. ' '  Owen  explained  to  him  that 
it  was  "a  fissure  that  had  been  blown  out  there". 
This  was  in  32  of  30-24.  On  this  trip  Owen  told 
Briscoe  that  the  "Elk  Hills  were  good  oil  territory." 
(R.  340.)  After  he  had  seen  this  seepage  he  said  to 
Briscoe :  ' '  This  is  good  enough,  my  boy,  hang  on  to 
it."     (R.  341.) 

Chas.  F.  Haberkern  spent  five  days  in  the  Elk 
Hills  with  Owen  in  1904.     Together  they  went  all 


147 

over  them  from  one  side  to  the  other  on  both  sides 
of  the  slope.  They  went  into  32-23  and  visited  the  oil 
seep  in  32  of  30-24.  Later  they  located  lands  in 
30-23,  the  even-numbered  sections,  Owen  telling 
Haberkern  not  to  locate  the  odd  or  railroad  sections, 
since  he,  Owen,  w^as  working  for  the  railroad  (R. 
350-1). 

And  so  the  evidence  could  be  recited  in  great  de- 
tail to  show  that  Owen,  not  once,  but  many  times  was 
heard  to  speak  of  this  seepage  in  32  of  30-24. 

Upon  the  record  there  is  no  room  for  doubt  that 
the  two  employes  of  appellants  whose  duty  it  was 
to  know  w^hatever  there  was  to  be  known  concerning 
the  oil  conditions  knew  by  actual  sight  and  from 
conversation  with  others  of  the   existence  of  out- 
crops of  oil  in  the  very  midst  of  the  lands  in  suit 
before  patent  and  at  the  very  time  of  patent ;  and  it 
will  hardly  be  disputed  that,  as  a  legal  proposition, 
what  they  knew  their  employer  knew  or  is  to  be  held 
to  have  known.    Citation  of  authorities  upon  so  plain 
a  question  is  not  deemed  necessary.     Nor  is  it  ad- 
mitted by  the  government  that  it  was  under  any  duty 
or  burden  to  show  actual  knowledge  on  the  part  of 
appellants;   for,   if  the   Southern  Pacific  Eailroad 
Company    had    made    the    ''careful    examination" 
which  in  his  affidavit  Eberlein,  its  acting  land  agent, 
swore  that  he  had  caused  to  be  made,  and  which  it 
was  its  duty  to  make,  there  is  no  escape  from  the 
conviction  that  there  would  have  resulted  the  ascer- 
tainment  of   so   conspicuous  and   generally  known 


148 

a  fact  as  the  presence  in  the  Elk  Hills  of  the  most 
cogent  evidences  of  the  existence  therein  of  oil. 

4.     SEEPAGES,  GAS  BLOW-OUTS,   ASPHALTUM,   CKOPPINGS  AND 
Olli  SANDS  IN  THE  VICINITY  OF  THE  LANDS  IN  SUIT. 

As  in  the  Diamond  Coal  and  Coke  Company  case 
the  coal  outcrop  to  the  east  and  the  fact  that  the 
rocks  in  which  the  outcrop  was  found  were  the  coal 
bearing  strata  of  the  region  were  among  the  "known 
conditions"  upon  which  the  Supreme  Court  predi- 
cated the  coal  character  of  the  lands  there  in  suit,  so 
in  the  instant  case  it  is  now  proposed  to  show  the 
existence  of  an  analogous  outcrop  of  oil  bearing 
sands,  seepages,  etc.,  to  the  east  of  and  around  the 
lands  here  in  suit  and  found  in  the  rocks  which  are 
the  oil  bearing  strata  of  the  region  here  in  question. 
The  existence  of  these  indicia  of  oil  is  not  denied  by 
appellants ;  but  it  is  only  proper  that  they  be  called 
to  the  attention  of  the  Court  and  the  evidence  con- 
cerning them,  their  location  and  the  notoriety  attach- 
ing to  them  briefly  reviewed. 

The  presence  of  appellants'  oil  experts  and  geolo- 
gists in  the  region  during  1903  and  1904,  as  well  as 
before  and  after  those  years,  is  abundantly  proven; 
so  that  it  follows  that  Avhat  others  know  they  them- 
selves either  knew^  or  had  opportunity  to  know, 
actual  knowledge  and  opportunity  of  knowledge  be- 
ing, for  the  purposes  of  this  case,  in  legal  conse- 
quence the  exact  equivalent  the  one  of  the  other. 
Treadwell,  the  oil  expert  of  appellants  who  preceded 
Dumble,  Dumble  himself,  Owen  and  Anderson  were 


149 

frequently  in  and  around  McKittrick  prior  to  patent. 
This  is  not  denied  by  appellants  and  to  cite  the  many 
passages  in  the  record  which  prove  it  would  be  a 
waste  of  time. 

Since,  in  reviewing  the  evidence  upon  this  topic, 
frequent  reference  Vvill  be  made  to  certain  towns  in 
the  oil  territory  on  the  west  side  of  the  San  Joaquin 
valley,  the  location  of  each  of  them  and  the  distance 
from  the  lands  in  suit  are  given : 

McKittrick,  formerly  called  Asphalto,  is  in  section 
21  of  30-22,  Mount  Diablo  Base  and  Meridian,  four 
miles  from  the  lands  in  suit. 

Fellows  is  in  section  31  of  31-23,  Mount  Diablo 
Base  and  Meridian,  six  miles  from  the  lands  in  suit. 

Taft  is  in  section  13  of  32-23,  Mount  Diablo  Base 
and  Meridian,  nine  miles  from  the  lands  in  suit. 

Maricopa  is  in  section  2  of  11-24,  San  Bernardino 
Base  and  Meridian,  twelve  miles  from  the  lands  in 
suit. 

Sunset  is  in  section  13  of  11-24,  San  Bernardino 
Base  and  Meridian,  fifteen  miles  from  the  lands  in 
suit. 

The  evidence  now  under  review  relates  in  each 
instance  to  a  period  prior  to  the  date  of  the  assailed 
patent  and  to  information  and  knowledge  possessed 
by  the  witnesses  at  that  time.  Time  geologically  is 
reckoned  by  periods — not  by  years.     It  is  obvious 


150 

that  seepages  and  other  indications  of  oil  which 
existed  in  1904  had  been  present  for  thousands,  per- 
haps millions,  of  years.  No  reference  is  made  to 
seepages  discovered  since  patent.  All  the  recited 
testimony  relates  to  knowledge  gained  and  things 
seen  by  witnesses  prior  to  December  12,  1904,  the 
date  of  the  patent.  There  is,  in  fact,  no  evidence  of 
the  discovery  since  the  patent  of  additional  seepages, 
etc.  All  of  them  were  known  and  were  notorious 
before  patent. 

Since  it  is  both  logical  and  convenient  to  do  so, 
the  seepages,  etc.,  are  grouped  by  to^\^iships: 

Toumship  30-21 : 

In  section  12  of  this  township,  six  miles  from  the 
lands  in  suit,  is  the  tar  spring  referred  to  by  B.  K. 
Lee  (R.  224).  Silas  Drouillard  referred  to  this 
spring  as  the  Bond  Spring,  the  tar  of  which  was 
used  in  doctoring  stock  as  far  back  as  1874  (R.  115, 
118). 

Township  30-22 : 

This  is  the  township  in  which  McKittrick,  which 
was  formerly  and  at  the  time  of  patent  known  as 
Asphalto,  is  situated.  It  immediately  adjoins  the 
lands  in  suit  on  the  west  and  the  large  seepages 
which  occur  along  the  folded  structure  south  and 
west  of  the  town  are  described  by  many  witnesses. 

H.  M.  Shreve,  who  first  came  to  this  locality  in 
1888,  testified:   "In  various  portions  of  30-22  in  the 


151 

immediate  vicinity  of  McKittrick  there  are  large 
sliowings  of  liquid  asplialtum  oozing  from  the 
ground"  (R.  455). 

Chas.  Briscoe,  who  first  went  to  McKittrick  in 
1897  and  remained  there  until  August,  1904,  testified : 

"I  know  about  oil  seei3ages  or  oil  indications 
in  and  about  the  town  of  McKittrick  and  the 
hills  there.  These  indications  consisted  of  oil 
running  out  of  the  ground  and  seeping  and  gas 
pockets  and  places  where  the  gas  was  bubbling 
up.  When  it  would  rain  the  gas  would  bubble 
up  and  oil  would  run  out  down  the  hill.  I  guess 
I  noticed  this  around  there  in  a  hundred  places. 
I  also  noticed  evidences  of  the  waste  of  oil  there 
in  former  times.  There  was  wdiat  we  called  a 
tar  flat.  We  never  did  anything  with  that  tar 
flat  because  in  the  summer  time  you  could  hardly 
get  across  it  and  dogs  and  squirrels  and  every- 
thing would  get  stuck  in  it.  This  tar  flat  was 
about  a  half  mile  south  and  east  of  McKittrick." 
(R.  335.) 

These  are  likewise  described  by  F.  J.  Sarnow  (R. 
169) ;  Ira  M.  Anderson  (R.  155,  161-2) ;  John  Jean 
(R.  131)  :  H.  A.  Blodgett  (R.  261-2-3) ;  W.  E.  Youle 
(R.  545). 

Anderson  on  page  155  described  the  conditions  and 
states  that  they  were  "known  in  general  to  the  popu- 
lace around  there  at  that  time.  It  was  a  matter  of 
common  notoriety".  On  pages  161  and  162  he  states 
that  about  a  mile  from  McKittrick  the  flat  is  "all 
covered  with  asphaltum". 

In  this  same  township  Silas  Drouillard  described 


152 

oil  sand  cropping  in  section  5  (R.  127)  ;  and  B.  K. 
Lee,  in  sections  8,  17,  18,  20,  28,  29,  34  and  35  (R. 
224-5). 

The  seepage  near  the  railroad  track  in  section  14, 
which  lies  on  the  axis  of  the  Elk  Hills  anticline, 
was  mentioned  by  Ira  M.  Anderson  (R.  163)  ;  Colon 
F.  Whittier  (R.  469)  ;  N.  C.  Farnum  (R.  496) ;  F.  J. 
Sarnow  (R.  169),  and  B.  K.  Lee  (R.  225,  230). 
C.  W.  Lamont  (R.  581),  Ira  M.  Anderson  (R.  163) 
and  N.  C.  Farnum  (R.  516)  fixed  this  seepage  at 
some  distance  from  the  railroad  tracks  in  the  hills. 
S.  P.  Wible  refers  to  seepages  in  a  nmnber  of  places 
west  of  the  railroad  tracks  including  sections  15  to 
17  of  this  township  (R.  321). 

S.  P.  Wible  testified  that  in  1903,  a  year  before 
patent,  he  told  Professor  Owen,  geologist  of  appel- 
lantts,  about  these  seepages  and  that  Professor  Owen 
said  that  he  had  found  them  and  others  as  well  (R. 
321).  Professor  Owen,  as  elsewhere  noted,  was  a 
geologist  at  that  time  in  the  employ  of  the  Southren 
Pacific  Company  in  search  of  minerals  on  unpatented 
lands  of  the  railroad  company  and  he  was  active 
during  the  years  1902-1903  in  the  examination  of 
lands  in  search  of  evidences  of  oil  for  his  employers. 

Exhibit  "C",  plat  of  survey  of  August,  1871,  of 
this  township  shows  oil  springs  in  sections  20,  28 
and  29;  and  Exhibit  "D",  survey  of  November  18, 
1893,  shows  evidences  of  oil  and  asphaltum  in  sec- 
tions 19,  20,  27,  28  and  29.  W.  E.  Youle  described  a 
heavy  bed  of  asphalt  about  ten  feet  thick  in  section 


153 

24  (R.  547-8)  ;  Ira  M.  Anderson  described  asplialtum, 
oil  sand  and  gas  which  he  lighted  in  section  34  (R. 
155-6)  ;  C.  F.  Whittier  described  asplialtum  along 
in  the  fold  running  from  the  northwest  to  the  south- 
east and  cropping  very  prominently  in  sections  34 
and  35  (R.  4700). 

All  of  the  foregoing  seepages  and  other  oil  indica- 
tions are  within  a  distance  of  from  one  to  four  or 
five  miles  from  the  lands  in  suit. 

Township  30-23: 

This  is  the  township  in  which  the  lands  in  suit  lie 
and  the  evidences  of  oil  therein  have  already  been 
treated  under  topic  3,  pages  120  et  seq.  of  this 
brief. 

Township  30-24: 

This  is  the  township  immediately  to  the  east  of 
and  adjoining  the  lands  in  suit  and  the  testimony 
concerning:  the  evidences  of  oil  therein  has  been  set 
out  under  topic  3,  pages  120  et  seq.  of  this  brief. 

Township  31-21: 

This  township  is  located  to  the  southwest  of  the 
lands  in  controversy,  about  ^even  miles  along  the 
line  of  contact  of  the  oil  bearing  sand  with  the 
Temblor  Range.  C.  F.  Whittier  described  a  large 
cropping  in  section  14  and  an  oil  seepage  in  section 
24  thereof  (R.  470). 

Township  31-22: 

This  township  corners  on  the  southwest  the  town- 
ship in  which  are  located  the  lands  in  suit.    Ira  M. 


154 

Anderson  described  an  oil  seepage  in  section  2 
thereof  similar  to  the  asphalt  and  oil  sand  showing 
in  section  34  of  the  same  to^vnship  to  the  north  (R. 
155-6). 

]I.  A.  Blodgett.  a  man  of  large  affairs  at  that  time 
in  and  about  McKittrick  who,  together  with  his 
partner,  Mr.  Jewett,  owned  many  oil  wells  around 
McKittrick  and  Sunset,  and  his  employee,  Youle, 
spoke  of  a  large  seepage  at  the  head  of  the  Elk  valley 
two  and  one-half  or  three  miles  southeast  of  a  large 
seepage  near  McKittrick  (R.  361).  It  was  Jewett 
&  Blodgett  who,  through  their  company,  the  Stand- 
ard Asphalt  Company,  went  into  partnership  with 
the  Southern  Pacific  Company  and  donated  to  the 
Southern  Pacific  Railroad  Company  the  right-of- 
way  for  the  railroad  from  McKittrick  to  Bakersfield 
to  tap  the  oil  resources  of  this  region.  C.  F.  Whit- 
tier  testified  concerning  an  oil  seepage  in  section  19 
(R.  470). 

Toivnsliip  31-24: 

This  township  corners  with  the  lands  in  suit  on 
the  southeast.  F.  D.  Lowe  found  on  section  1,  six 
miles  east  of  the  lands  in  suit,  an  oil  sand  300  yards 
due  north  from  the  northeast  corner  of  section  11 
(R.  146),  mentioning  also  another  oil  sand  a  half 
mile  west  of  this  point  on  the  section  line,  which 
would  be  in  the  central  portion  of  section  2.  He  also 
testified  concerning  a  well  which  was  drilled  to  a 
depth  of  560  feet  in  1901  which  contained  a  small 
showing  of  oil  and  a  gas  supply  which  was  piped  to 


155 

the  kitchen  and  used  for  cooking  (R.  146-7),  refer- 
ence to  which  in  some  detail  has  already  been  made 
in  this  brief  on  pages  125-6. 

Toivnship  32-22: 

This  township  is  six  miles  to  the  south  and  some- 
what west  of  the  township  in  which  the  lands  in  suit 
lie.  C.  F.  Whittier  testified  to  seepages  in  sections 
1  and  2  (R.  470),  the  latter  seepage  being  also  men- 
tioned by  B.  K.  Lee  (R.  225).  In  the  record  this 
township  is  erroneously  stated  as  31-23,  the  error 
being  corrected  in  the  original  record  at  page  319, 
but  by  oversight  the  correction  was  not  inserted  in 
the  present  transcript. 

Toivnship  32-23: 

This  township  is  immediately  to  the  south  of  the 
lands  in  suit  and  about  six  miles  distant.  C.  F. 
Whittier  testified  to  a  seepage  in  section  6  and  adds 
that  there  were  several  between  that  section  and 
Maricopa  (R.  470).  B.  K.  Lee  testified  to  outcrops 
of  oil  sands  in  sections  21,  22  and  26  (R.  225),  the 
latter  seepage  being  also  mentioned  by  S.  G.  Drouil- 
lard  (R.  115-6-7-8)  who  says  on  page  116:  ''I  know 
of  seeps  in  32-23  near  the  corner  of  23,  24,  25  and  26 
in  the  Midway.  That  is  where  I  located.  We  found 
great  blocks  of  asphaltum  there.  We  lifted  some 
of  them  up  and  there  was  oil  on  the  under  side  of 
them  seeping  out." 

John  Jean  refers  to  asphaltum  in  the  Midway 
region  without  specif  jdng  the  locality  (R.  131). 


156 

Toivnship  32-24: 

This  is  the  township  in  which  the  Buena  Yista 
Hills  partly  lie.  A  gas  blow-out  in  section  11  is 
referred  to  b}^  Parker  Barrett  (R.  525)  and  by  H.  P. 
Dover  (R.  462).  B.  K.  Lee  refers  to  this  as  the  seep- 
age visited  by  Josiah  Owen,  the  railroad  geologist 
(R.  230).  C.  F.  AVhittier  described  a  blow-out 
caused  by  oil  coming  up  through  a  crevice  in  the 
formation  to  which  he  set  fire  and  which  burned 
some  two  weeks  or  more  (R.  470-1).  This  is  given  in 
the  transcript  as  31-24,  but  should  be  32-24,  as  is 
shown  bv  the  fact  that  he  described  it  as  "what  is 
called  the  Buena  Vista  Hills". 

F.  M.  Anderson,  appellants'  geologist  during  the 
period  under  review  and  their  leading  expert  witness 
at  the  trial,  testified  that  in  September,  1903,  he  and 
Professor  Owen,  another  of  appellants'  geologists, 
were  on  the  southwest  corner  of  section  11  of  this 
township  and  noticed  the  peculiar  deposits  in  the 
western  border  of  that  section  which  they  took  to  be 
deposits  of  asphaltum  (R.  2401-2)  and  which  he 
described  as  differing  from  the  gas  blow-out  or  seep- 
age in  section  32  of  30-24  chiefly  in  quantity  and 
magnitude  of  outcrop  (R.  2478).  Both  in  1903, 
when  he  first  saw  these  deposits,  and  at  the  time  of 
his  visit  there  in  1908  he  believed  them  to  be  asphal- 
tum deposits  and  so  stated  and  reported.  (R.  2401-2 ; 
also  bottom  of  p  2478  and  p.  2479.) 

Seepages  in  the  region  of  Sunset: 

F.  J.  Sarnow  testified  that  there  are  seepages  ex- 


157 

tending  probably  two  or  three  miles  from  Sunset 
toward  McKittrick  (R.  169).  John  Jean  also  testi- 
fied concerning  seepages  in  the  Sunset  region  (R. 
131).  H.  A.  Blodgett  described  seepages  and  as- 
phaltum  about  McKittrick  in  1888  and  1889  (R. 
361).  W.  E.  Youle  testified  that  there  were  seepages 
along  the  line  of  contact  around  Sunset  in  a  great 
many  places  and  that  the  evidence  there  was  very 
plain  from  three  to  five  miles  and  impressed  him 
very  much  (R.  545).  H.  A.  Blodgett  also  testified 
to  a  seepage  just  south  of  the  standard  line  in  sec- 
tion 2  of  township  11  N.,  range  24  W.,  S.  B.  B.  &  M. 
(R.  362). 

Exhibit  A,  the  plat  of  survey  of  November  19, 
1858,  of  township  11  N.,  R.  23  W.,  S.  B.  B.  &  M.,  and 
Exhibit  ''B",  survey  of  township  11  N.,  R.  24  W., 
S.  B.  B.  &  M.,  approved  April  29,  1874,  show  several 
pitch  springs. 

Concerning  this  region  in  general  Ira  M.  Anderson 
testified  as  follows: 

"The  Sunset,  McKittrick  and  what  has  since 
become  the  Midway  fields  are  all  about  the  same. 
There  is  not  much  difference  in  them.  I  exam- 
ined them  and  investigated  them.  I  discovered 
indications  on  the  surface  of  the  ground  that 
showed  that  it  was  an  oil  country  at  that  time. 
I  discovered  some  of  those  evidences  between 
Sunset  and  McKittrick.  I  found  oil  sands  all 
through  there  and  oil  seeping  out  of  the  ground 
and  gypsum  all  through  that  country.  Where 
you  find  gypsum  you  will  find  oil.  I  found  that 
in  Sunset.  At  that  time  they  were  producing 
oil  in  Sunset  and  McKittrick.     Between  Mc- 


158 

Kittrick  and  Sunset  the  formation  was  about 
the  same.  There  were  these  blow-outs  through 
there,  asphalt  and  oils  and  plaees  where  you 
could  see  what  was  asphalt  around  there  and  gas 
coming  through  the  center  of  them.  That  con- 
dition extended  srenerally  from  McKittrick  to 
Sunset"  (E.  154-5). 

H.  A.  Blodgett  testified  that  prior  to  July  1,  1904, 
there  was  practicalh'  a  continuous  proven  field  from 
southeast  of  Sunset  to  four  or  five  miles  northwest 
of  McKittrick  barring  a  slip  from  Fellows  to  Mc- 
Kittrick and  that  slip  is  now  proven  territory  (R. 
362). 

Tlie  region  nortliwest  of  McKittrick: 

Silas  Drouillard,  who  visited  these  fields  as  early 
as  1874  and  for  forty-five  years  lived  in  and  about 
Bakersfield  and  was  a  prospector  and  miner,  testified 
that  he  followed  the  seepages  extending  northwest 
from  McKittrick  to  Canary  Springs,  which  is  in 
to\^mship  29-20,  fourteen  miles  northwest  of  Mc- 
Kittrick (R.  116).  B.  K.  Lee  testified  to  dry  oil 
sands  in  sections  18,  35  and  36  (R.  255)  and  F.  J. 
Sarnow  also  knew  of  the  same  sands  in  sections  36, 
near  McKittrick  (R.  174). 

5.     OIL  DEVELOPMENT  IN  THE  VICINITY  OF  THE 

LANDS  IN  SUIT. 

The  patent  in  this  case  was  issued  December  12, 
1904.  The  last  of  Eberlein's  non-mineral  affidavits 
was  dated  August  31,  1904.  Before  the  latter  date 
281  producing  oil  wells  had  been  drilled  in  the  region 
from  Sunset  to  McKittrick.    It  is  undoubtedly  true 


159 

that  appellants  knew  the  exact  niunber  of  these  wells 
and  the  location  and  production  of  each,  for  it  has 
already  been  shown  that  their  geologists,  Treadwell, 
Diimble,  Owen  and  Anderson,  were  constantly  in  and 
around  McKittrick  in  1902  and  1903 — for  that  mat- 
ter, Treadwell  was  there  before  that  time.  They 
were  making  examinations,  explorations  and  investi- 
gations, preparing  maps  and  reporting  to  their 
superiors.  They  could  not  have  failed  to  know  so 
patent  a  thing  as  the  existence  of  these  wells.  But 
this  is  beside  the  question;  for,  w^hether  they  knew 
or  not,  since  the  duty  of  knowing  all  that  it  was 
necessary  to  know  to  the  end  that  they  might  be 
qualified  to  make  the  proof  required  by  law,  namely, 
a  non-mineral  affidavit,  rested  upon  appellants,  im- 
posed by  law,  they  are  fixed  with  notice  and  knowl- 
edge. Dut}^  to  know,  certainly  when  coupled  with 
opportunity  of  knowledge,  is  the  exact  equivalent,  so 
far  as  liability  is  concerned,  of  actual  knowledge. 
This  again  is  so  plain  that  no  citation  of  authority 
is  deemed  necessary. 

The  existence  of  the  wells  in  question  in  1904  is 
not  understood  by  the  government  to  be  denied  by 
appellants.  It  is  proven  by  exhibits  Ha,  Hb  and  He, 
maps  respectively  of  the  McKittrick,  Midway  and 
Sunset  oil  fields  made,  published  and  distributed  by 
Barlow  &  Hill  prior  to  August  31,  1901.  There  is 
no  suggestion  that  these  maps  do  not  faithfully  and 
accuratel}^  portray  conditions  in  the  fields  to  which 
they  relate.  W.  H.  Hill,  a  member  of  the  firm  of 
Barlow  &  Hill,  testified  to  the  care  with  which  the 


160 

maps  were  prepared  and  the  accuracy  with  which 
they  set  forth  conditions  as  they  existed  (R.  109,  110 
and  111).  The  legends  on  the  maps  make  it  easy  to 
read  and  understand  them. 

The  distance  from  McKittrick  to  Sunset  is  less 
than  thirty  miles;  so  that  in  1904,  prior  to  patent, 
there  was  an  average  of  nine  producing  wells  to  the 
mile  in  the  region  lying  between  the  two  places. 

Twenty-five  hundred  of  these  maps  were  published 
and  sold,  probably  two  thousand  of  them  in  Kern 
County,  the  remainder  in  Los  Angeles,  the  East  and 
in  Europe  (R.  110).  Among  others,  the  Southern 
Pacific  Company  purchased  copies,  beginning  its 
purchase  at  the  time  when  the  maps  were  first  pub- 
lished (R.  2033-4). 

Exhibit  Ha  is  the  Barlow  &  Hill  map  of  the  "Mc- 
Kittrick Oil  Fields".  It  shows  a  producing  well  in 
section  27  of  30-22,  leSs  than  three  miles  west  of  the 
lands  in  suit.  It  shows  six  producing  wells  in  sec- 
tion 34  of  the  same  township,  about  the  same  distance 
from  the  lands  in  suit.  It  shows  twenty-two  pro- 
ducing wells  in  section  20  of  the  same  towmship,  four 
miles  from  the  lands  in  suit.  It  shows  seventeen 
producing  wells  in  section  29  of  the  same  township, 
four  miles  from  the  lands  in  suit.  It  shows  two  pro- 
ducing wells  in  section  28  of  the  same  township, 
three  and  a  half  miles  from  the  lands  in  suit.  And 
many  other  wells  are  sho\^Ti  in  other  sections  of  this 
township  and  of  30-21. 


161 

This  map  also  shows  two  wells  on  section  6  of  30-22 
on  the  very  anticline  located  by  Josiah  Owen,  geolo- 
gist of  appellants,  in  1903  on  the  map  introduced  as 
Exhibit  157.  The  exhibit  in  question,  Owen's  own 
handiwork,  shows  this  anticline  running  from  this 
section  6  of  30-22  through  the  lands  here  in  suit.  It 
was  undoubtedly  of  this  anticline  that  he  wrote  in 
his  letter  of  March  25,  1903,  to  his  superior,  E.  T. 
Dumble,  chief  consulting  geologist  of  appellants: 
"Producing  wells  ought  to  be  found  along  this  ex- 
posure"  (R.  1615,  1617). 

The  significance  of  the  relation  of  the  wells  shown 
on  the  Barlow  &  Hill  maps  to  the  lands  in  suit,  obvi- 
ous as  it  is,  will  appear  more  fully  in  the  discussion 
of  the  ensuing  toj)ic. 

Exhibit  Hd  is  the  Barlow  &  Hill  map  of  1904  of 
the  "Kern  River  Field".  This  oil  field  is  about 
twent.v-eight  miles  northeast  of  the  lands  in  suit  and 
was  discovered  in  1899.  The  map  shows  that  in  it  in 
1904  there  were  several  hundred  producing  oil  wells. 
In  Josiah  Owen's  letter  of  March  25,  1904,  to  Pro- 
fessor Dumble  he  wrote : 

"I  have  located  the  outcrop  of  the  horizon 
all  the  way  to  the  Sunset  oil  field  and  find  there 
is  but  one  oil  sand  and  I  believe  it  wiM  he  possi- 
ble to  trace  the  same  horizon  to  the  Kern  River 
fields.  There  are  several  reasons  for  helieving 
they  belong  to  the  same  zone."     (R.  1620.) 

The  foregoing  quotation  from  Owen's  report  to 
the  chief  consulting  geologist  of  appellants  is  made 


162 

for  the  purpose  of  showing  the  connection  between 
the  lands  in  suit  and  the  McKittrick  field,  on  the  one 
side,  and  the  Kern  Eiver  field,  on  the  other,  and  to 
point  out  the  strict  parallel  between  the  evidence  in 
this  case  and  that  in  the  Diamond  Coal  and  Coke 
Company  case.  The  outcrop  and  wells  from  Mc- 
Kittrick to  Sunset,  the  dip  of  the  strata  from  this 
outcrop  towards  the  lands  in  suit  and  the  existence 
of  a  developed  oil  field  beyond  the  lands  in  suit,  the 
two  fields  being  underlaid  by  "but  one  oil  sand" — 
these  conditions  present  a  situation  stronger  and  far 
more  convincing  than  that  developed  in  the  cited 
case. 

6,     GEOLOGICAL  CONNECTION  BETWEEN  THE  FOEEGOING 
LANDS  AND  THOSE  IN  SUIT. 

It  has  already  been  shown  that  the  line  of  out- 
crop to  the  east  of  the  lands  in  suit  in  the  Diamond 
Coal  &  Coke  Company  case,  constituting  a  most 
essential  part  of  the  "known  conditions",  is  paral- 
leled in  the  instant  case  by  the  long  line  of  seepages 
and  wells  to  the  east  of  the  lands  here  in  suit  and 
extending  from  Coalinga  to  Sunset.  It  is  proposed 
to  now  show  the  continuation  of  the  parallel  by 
demonstrating  by  the  record  that,  as  in  the  cited  case 
another  of  the  "known  conditions"  was  the  dip  of 
the  strata  exposed  in  the  outcrop  towards  and  under 
the  lands  there  in  suit,  so  in  the  instant  case  the  dip 
of  the  oil  sands  or  strata  exposed  in  the  line  of  seep- 
ages from  Coalinga  to  Sunset  and  developed  in  the 
two  hundred  and  eighty-one  wells  mentioned  is 
towards  and  under  the  lands  here  in  suit.    In  other 


163 

words,  it  is  established  beyond  cavil  that  there  is  oil 
in  commercial  quantities  to  the  west  of  the  lands  in 
suit  in  the  stratum  or  strata  of  oil  sands  there  ex- 
posed by  nature  and  shown  to  exist  in  wells  drilled 
by  the  hand  of  man.  Indeed,  the  existence  to  the 
west  of  and  near  to  the  lands  in  suit  of  oil  fields 
ranking  in  production  and  economic  importance  with 
the  greatest  in  the  world  is  conceded.  As  the  witness 
Youle  is  shown  to  have  said,  "that  oil  must  have  a 
direction  somewhere";  and  it  is  now  proposed  to 
show  that  its  "direction"  is  towards  and  under  the 
lands  in  suit — that  is,  that  the  sand  strata  which 
constitute  the  known  reservoir  of  immense  quanti- 
ties of  oil  to  the  west  of  the  lands  in  suit  "dip" 
towards  and  under  them. 

F.  Oskar  Martin  (qualifications  and  experience 
pages  609-10)  testified  that,  having  seen  and  exam- 
ined the  oil  indications  near  McKittrick,  he  found 
that  the  formation  underlying  those  exudations  or 
seepages  extended  easterly  toward  the  Elk  Hills  and 
that,  no  break  in  the  extension  towards  the  east  of 
the  formation  at  McKittrick  being  visible,  it  was 
evident  that  the  formations  overlying  the  oil  sand  at 
McKittrick  and  in  the  Elk  Hills  are  the  same.  He 
also  testified  that  the  formation  of  the  Buena  Vista 
Hills,  whose  oil  character  is  admitted  even  by  F.  M. 
Anderson,  appellants'  expert  geologist,  is  the  same 
as  that  of  the  Elk  Hills  (R.  614).  McKittrick  is  in 
section  21  of  30-22,  onlv  four  miles  from  the  lands 
in  suit. 


164 

W.  E.  Youle  (qualifications  and  experience,  pages 
540-1),  speaking  generally  with  reference  to  the  Elk 
Hills  and  surroundings,  said:  "That  country  is  a 
blanket"  (R.  552),  meaning  that  the  formation  is 
of  blanket  character,  that  is,  covering  the  entire 
vicinity  (R.  552).  The  strata  exposed  along  the  out- 
crop at  Sunset  dipped  into  the  valley  towards  the 
river  (R.  544-5).  The  conditions  around  McKittrick 
are  about  the  same  as  at  Sunset  (R.  544-5).  That 
country  was  not  a  shoestring  at  all,  but  a  great  big 
field.  The  formation  did  not  dip  into  the  hills — 
meaning,  as  shown  by  the  context,  the  hills  west  of 
McKittrick — but  into  the  valley — meaning  the  valley 
between  McKittrick  and  the  Elk  and  Buena  Vista 
Hills  (R.  550-1).  He  was  familiar  with  the  country 
inmiediately  surrounding  McKittrick  for  eleven 
years  and  was  over  it  continually  (R.  562).  The 
strata  were  dipping  away  from  McKittrick  and  were 
uplifting  in  the  Elk  Hills  (R.  568). 

Yet  again  he  said : 

"In  my  opinion  the  upheaval  in  the  Elk  Hills 
was  probably  caused  by  the  shrinkage  of  the 
earth.  As  the  formation  is  getting  older  and 
cooling  off,  it  goes  down  here  and  turns  up  at 
any  place  and  folds  along.  I  believe  that  is  ac- 
cepted by  a  great  many  men  that  are  well  posted 
in  formations  to  be  a  very  good  theory  and  per- 
haps correct.  As  to  what  I  mean  by  referrmg 
to  the  Elk  Hills  as  being  a  fold,  I  will  say  that 
on  the  McKittrick  side  of  the  formation  it  is 
dipping  at  an  angle  of  about  30  degrees,  but  the 
valley  is  nearly  level.  Now  that  was  new  to 
nearly  evervone  to  find  a  formation  dipping  out 
into  the  valley.    But  I  concluded  that  that  for- 


165 

mation  must,  to  a  certain  extent,  conform  to  the 
shape  of  the  valley,  or  else  the  valley  could  not 
have  been  there.  It  would  have  been  uplifted 
hills  like  all  that  country  is  if  it  was  not  that 
way ;  but  the  depth  is  hard  to  determine,  because 
there  was  no  way  of  determining-  it  without 
drilling  a  hole.  But  at  the  Elk  Hills  you  could 
see  it  lifting  up,  with  no  evidence  of  faulty  con- 
ditions like  a  running  away  of  millions  of  tons 
of  asphalt.  That  was  why  I  thought  it  would 
be  a  good  place  to  drill  a  well,  because  of  that 
uplift.  That  is  the  difference  between  anticline 
and  an  uplift.  That  is  folded  without  breaking 
it.  The  anticline  is  broken  into  and  goes  this 
way  and  that..  The  distinction  I  desire  to  make 
between  a  fold  and  an  anticline  is  that  the  anti- 
cline is  a  broken  fold  according  to  my  way  of 
determining  it."     (R.  572.) 

One  of  the  evidences  of  the  oil  value  of  the  Elk 
Hills  which  appealed  to  Youle  was  that  the  strata  ex- 
posed at  McKittrick  were  dipping  towards  the  Elk 
Hills— the  asphalt  at  McKittrick  had  faulted  and 
broken;  but  on  the  Elk  Hills  side  it  was  not  broken 
so  much,  but  folded  up;  and  he  made  up  his  mind 
that  there  was  a  fountain-head  of  oil  for  all  this  alike 
(R.  579). 

A.  C.  Veatch,  the  eminent  government  expert 
already  several  times  referred  to,  after  speaking  of 
the  series  of  porous  beds  along  the  east  flank  of  the 
Temblor  Range  ideally  designed,  on  the  one  hand, 
to  afford  a  reservoir  for  oil  and,  on  the  other  hand, 
to  prevent  undue  leakage  and  containing  oil  in  com- 
mercial quantities,  as  shown  by  a  line  of  seepages  of 
thirtv  miles  extent  and  a  great  series  of  wells  which 


166 

had  been  sunk  prior  to  1904  down  tlie  dip  from  these 
seepages,  testified  that  this  eastern  flank  of  the 
Temblor  Range  dips  in  a  general  way  towards  the 
San  Joaquin  valle}^,  the  gentle  slope  being  inter- 
rupted by  folds  which  are,  roughly  speaking,  parallel 
to  the  main  fold  of  the  axis  of  the  Temblor  Range 
and  rise  as  a  group  of  hills  above  the  surrounding 
country,  the  general  structure  being  evident  to  the 
most  casual  observer.  These  folds  are  the  Elk  Hills 
and  Buena  Vista  Hills  which  he  described  as 
elongated  domes  of  ideal  structure  for  oil  accumula- 
tion (R.  701-2-3). 

Mr.  Veatch  further  testified  that  the  geologic 
structure  of  the  Elk  Hills  is  so  very  evident  that  a 
geologist  standing  at  McKittrick  would  naturally 
and  at  once  suspect  the  character  of  the  fold.  If,  in 
addition,  he  was  aware  in  1904  of  the  seepages  along 
the  east  flank  of  the  Temblor  Range  and  the  wells 
drilled  down  the  dip  from  those  seepages  and  knew 
the  geological  structure  of  the  region  thereabout,  he 
could  not  but  have  known  the  anticlinal  nature  of 
the  Elk  Hills  and  from  the  development  at  McKit- 
trick must  certainly  have  regarded  them  as  an  oil 
proposition  (R.  717-8).  He  stated  that  this  must 
have  been  true  even  in  the  entire  absence  of  any 
knowledge  or  information  that  evidences  of  oil  had 
been  found  in  the  hills  themselves. 

In  this  connection  Mr.  Veatch  testified  that,  fixing 
the  length  of  the  lines  of  seepages  along  the  east 
flank  of  the  Temblor  Range  as  thirty  miles  through- 


167 

out  the  region  adjacent  to  the  lands  in  suit,  it  shows 
impregnation  of  oil  strata  extending  at  least  fifteen 
miles  from  a  given  centre.  Applying  this  distance  of 
fifteen  miles  from  the  outcrop,  it  includes  the  Elk 
Hills  and  the  Buena  Vista  Hills,  both  of  which  fall 
within  the  proven  area  from  geologic  determination 
(R.  702).  If  any  corroboration  were  needed,  it  is 
found  in  the  seepages  in  the  Elk  and  Buena  Vista 
Hills;  and  any  question  which  might  arise  with  re- 
gard to  the  persistence  of  the  oil  as  shown  by  these 
seepages  is  conclusively  set  aside  by  the  great  series 
of  wells  which  had  been  sunk  prior  to  1904  down  the 
dip  from  these  seepages  showing  that  the  seepages 
represented  oil  in  commercial  quantities  (R  703). 
(While  reference  to  the  above  pages  of  the  record 
will  show  that  this  witness  spoke  of  the  length  of  the 
line  of  seepages  as  fifteen  miles,  he  corrected  this  to 
thirty  on  pages  718-9,  explaining  satisfactorily  how 
the  error  was  made.) 

On  cross-examination  he  again  gave  the  reasons 
for  considering  the  Elk  Hills  oil  land  in  these  words : 

"A.  Along  the  east  flank  of  the  Temblor 
Range  there  is  a  series  of  porous  beds  exposed 
whic4i  can  be  traced  for  many  miles  readily. 
Along  this  outcrop  or  near  it  where  there  has 
been  a  slight  faulting  there  are  seepages  of  oil. 
These  seepages  extend  from  below  Sunset  to 
north  of  McKittrick,  showing  a  persistence  of 
the  oil  impregnation  in  those  porous  beds.  These 
porous  beds  dip  to  the  eastward  or  northeast- 
ward, toward  the  San  Joaquin  valley,  and  are 
interrupted  by  a  number  of  folds.  That  is,  the 
gentle  slope  is  interrupted  by  a  number  of  folds, 
these    folds   being   of    ideal    character    for    oil 


168 

accumulation.  One  of  these  folds  is  the  Elk 
Hills.  It  is,  broadly  speaking,  an  elongated 
dome  and  from  the  persistence  of  the  oil  along 
the  outcrop  as  shown  by  those  seepages  and  that 
showing  also  corroborated  by  the  great  number 
of  wells  that  have  been  sunk  down  the  dip  from 
this  outcrop  prior  to  1904,  indicates  to  me  that 
the  Elk  Hills  is  very  good  oil  land. "    (R.  803-4.) 

He  himself  observed  the  dip  of  the  formation 
towards  and  through  the  vallev  in  the  direction  of 
the  lands  in  suit  (R.  805). 

Attention  has  already  been  directed  to  a  letter 
written  by  E.  T.  Dumble,  chief  geologist  of  appel- 
lants in  1904  and  at  the  time  of  the  trial,  in  which 
he  transmitted  to  Mr.  Kruttschnitt  a  map  and  ad- 
vised him  that  the  newly  formed  Kern  Trading  & 
Oil  Company  should  acquire  by  purchase  or  lease 
from  the  Southern  Pacific  Company  such  lands  ''as 
we  consider  valuable  for  oil  purposes' \  In  this  let- 
ter he  wrote : 

"The  attached  maps  show  these  under  three 
heads:  first,  oil  lands  proven  or  practically 
proven,  colored  red;  very  probable  oil  lands, 
colored  green;  probable  oil  lands,  colored  blue. 
Of  the  oil  value  of  the  first  two  classes  there  is 
very  little  doubt ;  the  third  depends  in  part  upon 
the  continuance  of  normal  dips  and  conditions, 
but  in  addition  it  represents  untested  anti- 
clinals  which  show  good  indications  of  oil.  I 
consider  that  all  of  these  lands  should  be  under 
the  control  of  this  company."     (R.  2913.) 

The  immediately  pertinent  language  is  the  words 
''the  third  depends  upon  the  continuance  of  normal 
dips  and  conditions". 


169 

One  of  the  maps.  Exhibit  119,  shows  that  these 
dips  are  from  the  direction  of  the  east  flank  of  the 
Temblor  Range  towards  the  valley  and  the  lands  in 
suit.  As  already  pointed  out  on  page  80  of  this  brief, 
his  course  of  reasoning  was  identical  with  that  of 
Mr,  Veatch,  viz.,  that,  since  at  one  point  or  several 
points  oil  was  found  either  in  seepage  or  well,  it 
would  be  found  at  a  distance  along  the  continuation 
of  the  stratum  found  to  contain  oil  at  the  point  of 
starting,  provided  the  dip  and  conditions  continued 
normal.  This  it  is  sho^vn  both  that  he  recognized 
the  dip  of  the  strata  towards  the  lands  in  suit  (for 
he  speaks  of  untested  anticlincils  in  the  line  of  the 
dip,  necessarily  referring  to  the  Elk  and  the  Buena 
Yista  Hills)  and  did  not  scorn  the  so-called  ''horizon 
theory"  of  Mr.  Veatch.  Professor  Dmnble  assumed 
the  continuation  of  normal  dips  and  conditions — 
Veatch  did  no  more,  Dmnble's  assumption  carried 
hun  beyond  the  lands  in  suit,  as  shown  by  the  lands 
included  in  his  third  class,  probable  oil  lands,  colored 
blue  on  Exhibit  119. 

F.  Oskar  Martin,  as  has  been  shown,  found  no 
break  in  the  formation  and  thereupon  considered  the 
Elk  Hills  oil  land  because  of  their  relation  to  proven 
lands.  Thus  it  appears  that  experts  for  both  parties 
agreed  upon  the  reliability  of  the  assumption  that, 
if  you  start  at  the  outcrop  and  follow  the  stratiun 
along  the  direction  of  the  dip  to  points  favorable  to 
the  accumulation  and  retention  of  oil,  namely,  anti- 
clines, you  will,  by  sinking  wells,  find  oil.  What 
could  chief  geologist  Dumble  have  meant  when  he 


170 

indicated  to  the  personal  representative  of  the 
president  of  the  Southern  Pacific  Company  that  the 
oil  character  of  certain  lands  depended  upon  the 
continuation  of  normal  dips  and  conditions  other 
than  that,  if  the  dip  and  conditions  continued  nor- 
mal, the  lands  in  his  third  class  would  be  found  to  be 
oil  lands?  He  assumed  that  they  were  necessarily 
oil  lands  because  along  the  line  of  the  dip  of  the 
strata  which  outcropped  in  seepages  and  had  been 
developed  in  wells  to  the  west  of  the  lands  in  this 
third  class. 

It  will  be  recalled  that  the  letter  under  considera- 
tion related  to  lands  to  be  transferred  to  the  fuel 
department  of  the  Southern  Pacific  Company,  the 
Kern   Trading   &   Oil   Company.      The   other   map 
which  accompanied  the  letter  was  not  identified  or 
produced.    Appellants  endeavored  to  assimilate  it  to 
their  Exhibit  120 ;  but  the  legend  and  the  coloring  of 
that  exhibit  manifestly  exclude  it.    The  government 
contended  that  Exhibit  157  is  the  map  in  question. 
However  that  may  be,  there  is  manifestly  and  neces- 
sarily close  connection  between  the  map  referred  to 
in  the  letter  in  question  and  the  list  of  lands  actually 
transferred  to  the  Kern  Trading  &  Oil  Company  by 
the  lease  of  August  2, 1904,  Exhibit  YY  (R.  1101- U)\ 

The  court  may  confidently  look  to  this  letter  to  find 
the  lands  in  Professor  Dumble's  third  class.  The 
lands  in  the  McKittrick  district  on  pages  1106-7-8 
of  the  record  include  section  31  of  30-23  which  cor- 
ners with  section  29  of  that  township,  one  of  the 


171 

sections  in  suit;  sections  5,  9,  13,  23  and  25,  which 
are  farther  away  from  the  outcrop  than  some  of  the 
lands  in  suit ;  and  sections  31  and  33  of  31-24  and 
sections  3,  11  and  13  of  32-24  are  also  farther  re- 
moved from  the  outcrop  than  the  lands  in  suit. 
From  all  of  which  it  follows  that  appellants'  geolo- 
gists, Dumble  and  Owen,  pursued  the  plan  of  start- 
ing from  the  outcrop  and  following  the  dip  of  the 
sands  throughout  a  distance  even  greater  than  that 
laid  down  by  Veatch  as  the  basis  for  determining  by 
geological  deduction  the  oil  character  of  lands. 

In  this  connection  special  attention  is  invited  to 
the  testimony  of  E.  T.  Dumble  on  pages  3001,  3002, 
3003,  3004  and  3005,  as  follows: 

"Under  certain  conditions  I  regarded  at 
that  time  anticlinals  as  good  physical  evi- 
dence in  an  oil  field  of  the  presence  of  oil, 
petroleum.  The  conditions  would  depend  en- 
tirely upon  the  facts  as  I  found  them  or 
understood  them  from  my  assistants.  When 
an  anticlinal,  which  in  addition  to  being  an 
anticlinal,  shows  indications  of  oil  I  thought 
it  was  a  good  one.  It  might  and  it  might  not 
be  a  fact  that  when  I  found  an  anticlinal  in 
lands  which  were  in  the  immediate  vicinity 
of  oil  lands,  proven  oil  lands,  it  would  be  an 
indication  to  me  of  possible  oil  land;  it  would 
at  least  induce  me  to  look  into  it  if  I  had  any 
interest  in  it.  So  far  as  I  know  that  anti- 
cline running  across  township  30  south,  23 
east,  })assing  through  sections  19,  29,  25  and 
27,  was  an  untested  anticline,  but  it  does  not 
fall  within  the  description  which  I  gave  Mr. 
Kruttschnitt  of  probable  oil  lands  where  I 
state  'It  represents  untested  anticlinals  which 


172 

show  good  indications  of  oil'.  Defendants' 
exhibit  115  is  a  map  that  Mr.  Owen  obtained 
from  the  Land  Department  of  the  Southern 
Pacific  Company  in  September,  1902.  There 
appears  upon  this  map  the  legend  'All  shaded 
tracts  reserved  from  sale  because  in  or  near  oil 
territory.'  The  shaded  tracts  in  township 
30-23  are  sections  3,  5,  6,  9,  11,  13,  the  northwest 
quarter  of  17,  northwest  quarter  of  19  and  all  of 
section  31 ;  and  the  shaded  tracts  in  township  30 
south,  21  east,  as  shown  by  this  exhibit,  are  sec- 
tions 1,  7,  17,  19,  21,  23,  25,  27  and  35.  There  is 
nothing  on  that  map  to  show  one  way  or  the 
other,  on  the  date  of  the  delivery  to  Mr.  Owen  of 
this  map,  or  just  prior  to  that  time  when  this 
map  had  been  constructed,  that  the  lands  in  this 
suit  appear  not  to  have  been  patented  nor  does  it 
show  the  patenting  of  sections  29,  33  and  31  in 
township  30-24. 

"Q.  Now,  will  you  show,  beginning  at  the 
Buena  Vista  Lake,  the  nearest  lands  to  the  Elk 
Hills,  and  particularly  the  lands  in  this  suit, 
w^hich  were  shaded,  beginning  at  Township  31 
South,  Range  24  East,  beginning  at  this  end  of 
the  lake,  that  is,  along  here?     (Indicates.) 

'*A.     15,  17,  southwest  quarter  of  7. 

"Q.     Now,  in  31-23? 

*'A.  South  half  of  13,  all  of  15  and  the  east 
half  of  17,  all  of  9,  5. 

"Q.  Now,  the  lands  which  you  have  de- 
scribed completely  enclosed  on  the  north,  the 
northwest  and  the  south  and  the  west,  the  lands 
in  this  suit,  did  they  not? 

*'A.     They  do. 

**0.  Those  were  the  lands  which  had  been  re- 
served from  sale  because  they  were  in  or  near 
oil  territory  in  1902,  is  that  correct 


173 


a 


A.  According  to  the  legend  of  this  map,  but 
they  were  a  part  of  a  blanket  reservation,  gen- 
eral reservation. 

"Q.  Yes,  they  had  been  reserved  from  sale, 
had  they  not  ? 

''A.     They  had  been  reserved  from  sale. 

"Q.  And  vou  so  miderstood  from  Mr.  Tread- 
well? 

*'A.  I  had  no  knowledge  from  Mr.  Treadwell 
of  what  lands  were  reserved.  This  is  my  own 
information  as  to  what  lands  were  reserved. 

"Q,  Now,  with  reference  to  the  line  of  oil 
outcrop  along  the  eastern  flank  of  the  Temblor 
Eange,  running  from  McKittrick  in  a  southeast- 
erly direction  towards  Sunset,  how  much  further 
away  is  the  nearest  land  which  was  then  resented 
by  the  railroad  company  from  sale  because  in  or 
near  oil  territory,  in  Township  30  South,  Range 
24  East,  than  the  furthermost  lands  from  that 
line  of  outcrop  of  the  lands  in  this  suit  ? 

"A.     Well,  I  never  estimated  it. 

''Q.  Well,  it  would  be  at  least  six  miles, 
wouldn't  it?    It  would  be  across  a  township? 

''A.     It  would  be  across  a  township. 

"Q.  And  that  would  be  six  miles,  wouldn't 
it? 

"A.  In  that  location,  No.  1,  it  would  be  six 
miles. 

"Q.  And  also  in  this  location  here  it  would 
be  six  miles  ? 

"A.     It  would  be  six  miles  from  that  line. 

"Q.  Then,  when  you  took  charge  of  the 
geological  affairs  of  the  Southern  Pacific  Com- 
pany in  California  in  reference  to  the  oil  lands 


174 

of  the  Southern  Pacific  Eailroad  Company,  you 
found  that  it  had  been  the  policy,  which  you 
say  you  did  not  disturb  after  you  took  charge, 
to  hold  in  reservation  from  sale,  because  in  or 
near  oil  territory,  all  of  the  lands  which  were 
owned  by  the  Southern  Pacific  Railroad  Com- 
pany in  township  30-23  and  in  township  30-24? 

"A.     That  was  their  policy. 

"Q.  And  you  found  that  to  be  a  fact,  did 
you  not,  Mr.  Dumble? 

'*A.     Yes.  sir. 

"Q.  Now,  if  the  lands  in  suit  had  been 
patented  at  that  time,  and  basing  your  answer 
solely  upon  what  you  know  of  that  reservation 
order,  what  you  were  told  by  Mr.  Treaclwell, 
and  upon  that  exhibit  which  you  yourself 
brought  into  court,  those  lands  would  most  cer- 
tainl^y  have  been  reserved  with  the  others,  would 
they  not? 

''A.  If  a  blanket  reservation  had  been  put 
on  covering  all  lands  in  the  valley  as  that  was 
it  would  certainlv  have  covered  any  lands  they 
might  have  had  in  30-23  or  30-24. 

"Q.  Yes,  and  would  certainly  have  covered 
the  lands  in  this  suit  ? 

''A.     Unquestionably. 

"Q.  So  that  if  the  patent  had  been  issued 
to  the  lands  involved  in  this  suit  and  you  had 
found  that  policy  in  effect,  reserving  those  lands 
because  they  were  in  or  near  oil  territor}^  you 
would  not  have  disturbed  it,  would  vou  % 


a 


A.     I  would  not." 


The  foregoing  extract  shows  that  prior  to  patent 
appellants  had  withdrawn  from  agricultural  sale 
lands  which  enclosed  on  the  north,  northwest,  south 


175 

and  west  the  very  lands  here  in  suit — again  demon- 
strating that  appellants  prior  to  1905  classified  as 
oil  lands  territory  immediately  surrounding  the 
lands  in  suit  and  that  they  would  have  so  classified 
the  very  lands  in  suit  had  they  been  then  patented. 

Appellants'  geologist,  Ochsner,  while  expressing 
the  view  that  the  Elk  Hills  were  "too  far  out  to 
fill,"  but  that  in  them  would  be  found  scattering 
amounts  of  oil  (R.  221-2),  admitted  that  to  a 
geologist  the  details  of  the  evidence  would  go  a  long 
way  towards  an  opinion  in  favor  of  the  Elk  Hills 
being  oil  territory  and  that  on  less  evidence  than 
existed  with  reference  to  the  Elk  Hills  in  1904  he 
had  advised  the  investment  of  money  in  the  Kettle- 
man  Hills  where  he  had  found  an  ideal  anticlinal 
structure,  but  no  seepages  within  seven  miles,  the 
relation  of  the  seepages  to  the  anticlinal  structure 
being-  the  onlv  evidence  of  the  oil  character  of  the 
Kettleman  Hills  (R.  226).  He  first  formed  an 
opinion  of  the  Elk  Hills  as  a  possible  or  probable 
oil  bearing  territory  as  the  result  of  work  done  in 
1907  (R.  2203).  He  had  been  in  the  Buena  Vista 
Hills  and  pronounced  them  similar  in  structure  and 
formation  to  the  Elk  Hills  and  an  uplift  of  the 
same  geological  period  (R.  2210).  Assuming  a 
cropping  of  oil  sand  in  the  Elk  Hills  in  connection 
with  the  correlation  of  the  oil  sand  outcroppings 
along  the  McKittrick  front  and  down  as  far  as 
Sunset  where  the  valley  makes  contact  with  the 
Temblor  Range,  he  would  say  that  the  facts  would 
be  a  strong  element  in  favor  of  warranting  a  com- 


176 

petent  geologist  to  advise  the  investment  of  money 
there  with  the  hope  of  developing  a  producing  oil 
property  and  he  believed  that  many  competent  geolo- 
gists had  advised  the  investment  of  capital  on  less 
evidences  (E.  2211-2). 

Counsel  for  appellants,  by  the  very  form  of 
his  examination  of  the  witness  Anderson  on  pages 
2422-3,  admits  the  dip  of  the  formation  towards 
the  valley  and  the  lands  in  suit. 

F.  M.  Anderson  was  appellants'  principal  ex- 
pert, his  evidence  covering  three  hundred  type- 
written pages.  Upon  him  they  greatly  depended. 
He  went  into  the  region  about  McKittrick  in  1903, 
entering  the  employ  of  the  Southern  Pacific  Com- 
pany as  geologist  under  Professor  Dumble;  but  he 
did  not  set  foot  in  the  Elk  Hills  until  April,  1911 
(R.  2459),  at  which  time  he  went  there  to  prepare 
as  a  witness  in  this  case.  He  was  there  next  in 
November,  1912  (R.  2461).  As  will  be  sho^m,  he 
expressed  conclusions  at  variance  not  onl}^  with 
those  of  Dr.  Branner,  Veatch  and  Martin,  govern- 
ment experts,  but  with  appellants'  own  expert, 
Ochsner,  and  with  their  deceased  geologist,  Owen. 
While  Ochsner  testified  that  the  Elk  Hills  and 
Buena  Vista  Hills  were  very  similar  in  structure 
and  formation  and  were  uplifts  of  the  same  geo- 
logical period  (R.  2210),  Anderson  stated  that  they 
were  altogether  different  and  dissimilar  (R.  2451-2). 
Since  Owen  was  not  a  witness,  it  serves  no  useful 
purpose  to  here  show  their  differences — they  will 
be  noted  later  upon  another  phase  of  the  case. 


177 

Mr.  Anderson  noted  an  anticline  and  subsidiary 
anticlines  in  the  Elk  Hills  and  represented  them  on  a 
map  which  was  used  in  connection  with  his  testi- 
mony (R.  2441-2)  ;  but  concluded  that  the  Elk  Hills 
were  too  far  away  from  the  outcrop  to  be  valuable 
(R.  2388),  the  distance  being  six  miles  (R.  2441). 
He  did  not  believe  that  the  Etchegoin  sands,  which 
he  pronounced  the  oil-bearing  sands  of  the  region, 
could  ever  be  carried  to  the  Elk  Hills  and,  if  they 
were,  only  in  very  thin  strata  (R.  2455).     The  Elk 
Hills,  he  said,  might  at  some  time  have  contained 
an  avenue  along  which  oil  migrated,  but  that,  if 
any  oil  is  there  now,  it  would  be  the  tail  end  of 
the   procession   and   not   in   commercial   quantities 
(R.  2456).    He  admitted  that  in  1903  and  1904  his 
conclusion   as   to   the   likelihood   of   the   Elk   Hills 
being  then  or  ever  oil  territory  was  negative;  that, 
at    least,    it    was    not    commercially    oil    territory 
(R.  2454).     But  in  1903-1904  he  recommended  the 
inclusion  in  the  lease  to  the  Kern  Trading  &  Oil 
Company  of  section  31  of  30-23,  which  is  in  the 
Elk  Hills  and  corners  with  the  very  lands  in  suit 
(R.  2415  and  2702).     Thus,  he  excluded  the  lands 
in  suit  on  the  ground  that  they  were  too  far  away 
from  the  outcrop,  but  included  in  a  lease  for  oil 
purposes  to  the  fuel  department  of  his  employer 
a  section  which  is  equall}^  far  removed  from  the 
outcrop. 

Mr.  Anderson  brought  himself  into  sharp  con- 
flict with  Dr.  Branner  and  A.  C.  Veatch.  He  dis- 
sented from  the  latter 's  '* horizon  theory,"  which  he 


178 

was  actually  applying  in  classifying  section  31  of 
30-23  as  oil  land;  nor  could  lie  lend  countenance  to 
tlie  position  of  Dr.  Branner  tliat  a  geologist  who 
saw  the  Elk  Hills  in  1903  and  observed  the  sur- 
rounding conditions  and  who  did  not  conclude  that 
the  Elk  Hills  were  oil  lands  did  not  know  his 
business  (R.  2546-7).  No  charge  against  him  of 
timidity  or  modesty  could  be  sustained. 

In  1903  Anderson  thought  the  Buena  Vista  Hills, 
which    his    colleague,    Ochsner,    pronounced    very 
similar  in  structure  and  formation  to  the  Elk  Hills 
and  an  uplift  of  the  same  geological  period,  highly 
prospective  oil  land  (R.  2102-3).    One  of  the  things 
which  contributed  to  this  conclusion  was  the  large 
deposits  in  sections  11  and  15  in  the  Buena  Vista 
Hills   which   both   he   and    Owen   in   1903   and   in 
1908  thought  asphaltum  and  so  reported  (R.  2478-9). 
These    deposits    differ   from   that   in   32    of    30-24 
chiefly,  he  said,  in  quantity  and  magnitude  of  out- 
crop  (R.  2478).     He  did  not  see  the  latter,  how- 
ever,  until   November,   1912    (R.    2473),   at   which 
time,  differing  with  Dr.  Branner,  Veatch,  Martin 
and  manv  other  skilled  scientists,  he  concluded  that 
it  was  a  gas  seepage— partly  hydrocarbon  gas  and 
hydrogen  sulphide— not  necessarily  petroleum  gas- 
largely  methane  (R.  2474-5).     To  be  consistent,  he 
then  changed  his  view  as  to  the  character  of  the 
deposits  in  the  Buena  Vista  Hills.     At  that  time, 
it  may  be  stated  parenthetically,  some  of  these  lands 
in  the  Buena  Vista  Hills  had  been  bought  for  oil 
purposes    under    the    advice    of    Anderson    and    a 


179 

notable  well  had  been  brouglit  in  by  the  Honolulu 
Consolidated  Oil  Company  which  was  accepted  as. 
demonstrating  the  immense  richness  of  the  land 
as  oil  territory.  When  in  1903  and  later  Anderson 
and  Owen  were  working  together, '  Owen,  as  was 
known  to  Anderson,  was  seeking  to  acquire  this 
land  in  the  Buena  Vista  Hills  under  agricultural 
scrip  for  himself  and  Professor  Dimible,  all  three 
of  them  being  at  the  time  geologists  of  the  Southern 
Pacific  Company  (E.  2562-3-4-5-6-7-8-9-70).  When 
Bumble  told  Anderson  that  he  was  obtaining  the 
land  for  orange  or  eucah^otus  culture,  the  latter 
*' smiled  more  or  less  at  the  likelihood  of  raising 
oranges  there"  (R.  2568-9).  Owen  located  sec- 
tions 2  and  10  of  32-24  in  the  Buena  Vista  Hills  for 
gypsum.  Anderson  and  Owen  visited  both  sections 
in  1903  and  agreed  that  they  were  oil  lands.  Ander- 
son had  never  seen  any  commercial  gypsum  on  them 
(R.  2576-7).  Diunble  told  him  that  the  Buena  Vista 
Land  &  Development  Company  held  interests  for 
him  and  Owen  in  these  lands  (R.  2579).  They 
were  subsequenth  sold  to  Captain  Matson,  head  of 
the  Honolulu  Company,  upon  Anderson's  advice 
that  they  were  oil  lands  (R.  2580).  Owen  let  Ander- 
son know  that  the  lands  were  for  sale  and  Anderson 
offered  them  to  Crandall,  attorney  for  Matson 
(R.  2581-2).  Anderson  knew  that  the  Buena  Vista 
Land  &  Development  Company  was  trying  to  secure 
agricultural  patents  to  these  lands  which  he,  Ander- 
son, knew  were  mineral  lands  (R.  2582-3).  Ander- 
son knew  that  Owen  and  Dumble  were  contrib- 
uting geological  advice  to  the  Buena  Vista  Land  & 


180 

Development  Com]3any  as  to  tlie  oil  value  of  these 
lands  which  it  was  seeking  to  acquire  by  the  use 
of  agricultural  scrip   (R.  2583-4-5-6). 

Anderson  admitted  on  cross-examination  that,  if 
he  had  known  in  1903  and  1901  of  the  gas  blow-out 
in  32  of  30-24,  he  would  temporarily  have  believed 
the  Elk  Hills  oil  lands  (R.  2626);  and  yet  they 
were  as  far  away  from  the  Temblor  outcrop  then 
as  now  and  the  presence  of  the  gas  seepage  cer- 
tainly made  them  no  nearer.  As  already  shown, 
he  testified  that  he  had  in  his  own  mind  in  1903 
condemned  them  and  utterly  cast  them  out  because 
of  their  distance  from  the  outcrop ;  but  at  the  trial 
he  admitted  that  knowledge  of  the  gas  seepage  would 
have  induced  a  different  conclusion.  Can  it  be 
that  this  admission  was  made  because  necessary  to 
free  him  from  embarrassment  in  view  of  the  fact 
that,  while  condemning  the  Elk  Hills,  he  appraised 
their  neighbors,  the  Buena  Vista  Hills,  as  oil  lands 
though  practically  the  same  distance  from  the  out- 
crop to  the  West?  Confronted  with  the  similarity 
between  the  two  uplifts,  the  one  of  which  he  pro- 
nounced good  and  the  other  bad,  he  had  the  "im- 
pressive" deposit  in  the  Buena  Vista  Hills  to 
buttress  his  favorable  opinion,  while  in  the  Elk 
Hills  he  had  not  then  seen  the  deposit  which  he 
afterwards  claimed  differed  from  that  in  the  Buena 
Vista  Hills  chiefly  in  magnitude.  And  he  admitted 
that,  after  all,  the  nearest  point  of  the  Elk  Hills 
was  distant  only  four  miles  from  his  so-called 
Etchegoin  shore-line  (R.  2648). 


181 

Admitting  that  section  31  of  30-23  rises  on  the 
slope  of  the  Elk  Hills  and  that  he  in  1903  deter- 
mined that  it  was  prospective  oil  land  and  recom- 
mended its  inclusion  in  the  lease  to  the  Kern 
Trading  &  Oil  Company,  Anderson  said  that  if  it 
was  prosiDective  oil  land  in  1903,  perhaps  all  of  the 
lands  in  this  suit  were  prospective  oil  lands  at  that 
date  (R.  2702-3) ;  and  that,  if  they  had  been 
patented  at  that  time,  he  perhaps  would  have  in- 
cluded them  in  the  Kern  Trading  &  Oil  Company 
lease,  though  he  was  doubtful  about  this  (R.  2703). 

Taking  all  of  the  foregoing  together,  it  is  mani- 
fest that  Anderson  clearly  recognized  in  1903  the 
relation  of  the  Elk  Hills  to  the  surrounding  oil 
country.  His  reference  to  the  migration  of  oil  from 
the  Temblor  contact,  where  the  seepages  and  long 
line  of  outcrop  are,  towards  the  lands  in  suit  shows 
that  he  recognized  the  dip  of  the  strata  away  from 
the  Temblor  Range  and  towards  the  valley  and  the 
Elk  and  Buena  Vista  Hills  (R.  2155-6).  There 
could  manifestly  be  no  "migration  of  oil"  in  that 
direction  unless  the  oil  strata  dipped  in  that  direc- 
tion. Indeed,  his  testimony  is  filled  with  statements 
showing  his  recognition  of  the  favorable  structure 
and  situation  of  the  lands  in  suit,  insomuch  that  it 
savors  throughout  of  a  confession  and  avoidance; 
and  it  is  all  crowned  with  the  reluctant  admission 
that,  if  in  1903  he  had  known  of  the  deposits  in 
32  of  30-21,  he  w^ould  temporarily  have  regarded 
the  lands  in  suit  as  oil  lands  (R.  2626).  In  other 
words,  if  Anderson  in  1903  had  seen  these  deposits, 


182 

as  had  Owen,  his  fellow  geologist,  he  would,  as 
Owen  and  others  will  be  shown  to  have  done,  have 
regarded  the  Elk  Hills  as  oil  lands.  1903  is  the 
time  bv  which  events  are  to  be  measured  in  this 
case.  What  was  thought,  what  was  believed,  what 
was  known  in  1903  and  1904 — these  are  the  im- 
portant things  in  this  controversy;  for  the  inquiry 
is  as  to  conditions  then  and  whether  they  were  svich 
as  to  engender  the  belief  that  these  lands  were 
valuable  oil  lands.  Anderson  says,  in  eifect,  that, 
if  he  had  known  what  Owen,  appellants'  trusted, 
skilled  geologist,  knew,  it  would  have  engendered 
in  him  the  belief  that  these  lands  were  oil  lands. 

Anderson^  with  commendable  frankness,  admitted 
that  the  fact  that  the  log  of  a  well  drilled  in 
1910-11  b}^  the  Associated  Oil  Company,  a  sub- 
sidiary of  the  Southern  Pacific  Company,  in  sec- 
tion 26  of  30-23,  in  the  immediate  midst  of  the 
lands  in  suit,  showed  159  feet  of  oil  sand  did  "not 
seem  to  harmonize  with  my  theory — it  does  not  fit 
my  theory  very  well  to  see  so  much  sand  repre- 
sented in  the  log."  (R.  2651.)  He  had  said  that 
the  Elk  Hills  were  too  far  away  from  the  shore- 
line which  he  had  conveniently  discovered,  one  of 
whose  points  was  seen  at  McKittrick,  for  the  current 
to  have  carried  the  sands  to  them.  The  log  in 
question  was  brought  into  court  b}"  apjDellants  and 
showed,  as  indicated,  159  feet  of  sand,  while  Ander- 
son admitted  that  the  average  thickness  of  sands  in 
the  Midway,  Sunset  and  McKittrick  districts  was 
much  less  than  sixty  feet  and  that  there  were  only 
two  wells  in  those  districts  showing  greater  thick- 


183 

iiesses  than  159  feet  (R.  2635-6).  And,  finally,  this 
witness,  to  save  his  face  in  view  of  subsequent 
developments,  admitted  that,  notwithstanding  all 
that  he  had  said  in  condemnation  of  the  Elk  Hills, 
in  1903  and  1904  he  thought  that  there  might  be 
some  insignificant  deposits  of  oil  in  them  (R.  2454). 
And  this,  too,  from  the  expert  who  projected  and 
stood  sponsor  for  the  proposition  that  the  drill  is 
the  only  test  of  oil  land.    He  said : 

''There  are  obviously  four  essentials  to  oil 
territory,  the  failure  of  any  one  of  which  might 
be  fatal.  The  territory  must  have  the  proper 
structural  conditions,  the  proper  stratigraphic 
conditions,  the  proper  source  from  which  oil 
may  be  derived  in  the  unmediate  surrounding 
country  and,  last  and  most  important  of  all,  it 
must  have  oil  in  the  reservoir,  whatever  it 
might  be."  (R.  2548.) 

Asked  how  you  can  determine  whether  it  has  oil 
in  the  reservoir,  he  replied : 

"You  can  determine  it  only  by  drilling  wells" 
(R.  2548). 

Measured  bv  his  own  test,  how  could  he  have 
determined  that,  if  the  Elk  Hills  contained  oil,  it 
was  only  in  insignificant  amounts'?  How  much  oil 
there  is  at  any  place  can,  he  says  in  one  breath,  be 
determined  only  by  the  drill ;  and  in  another  breath 
he  says  that  he  determined  without  the  drill  that 
such  oil  as  was  in  the  Elk  Hills  was  insignificant  in 
amount,  at  least  not  commercial.  His  unfavorable 
view  of  the  Elk  Hills  is  condemned  by  his  own 
test — ^he  is  "hoist  by  his  own  petard". 


184 

It  must  already  be  apparent  that  there  is  no  real 
controversy  in  the  evidence  as  to  the  favorable 
structure  and  stratigraphy  of  the  lands  in  suit, 
whether  one  considers  the  testimony  of  the  appel- 
lants or  of  the  govermnent.  Nor  is  there  doubt  of  the 
presence  of  oil  in  commercial  quantity  in  the  "im- 
mediate surrounding  country".  Anderson  says  that 
these  in  combination  mean  nothing  until  they  have 
been  followed  by  the  drill — the  exact  counterpart 
of  the  contention  of  the  Coal  Company  in  the 
Diamond  Coal  and  Coke  Company  case  which  was 
condemned  by  the  Supreme  Court. 

B.  K.  Lee  testified  to  an  outcrop  on  section  35 
of  30-22,  which  is  within  less  than  two  miles  of 
the  nearest  of  the  lands  in,  suit  (R.  224-5).  Colon  F. 
Whittier  testified  to  a  very  prominent  outcrop  in 
the  same  section  (R.  470).  From  this  it  appears 
that  the  lands  in  suit  are  considerably  nearer  the 
outcrop  than  Mr.  Anderson  was  willing  to  admit. 
His  proximity  theory  would  not  permit  of  too  great 
nearness.  Surely  two  miles  qualifies  as  "immediate 
surrounding  country ' '. 

Owen's  map,  Exhibit  157— not  a  government 
exhibit,  but  appellants '—shows  the  Elk  Hills  anti- 
cline from  section  6  of  30-22  and  through  the  lands 
in  suit.  On  this  section  6  in  1904  there  were  at 
least  two  oil  wells.  F.  J.  Sarnow  drilled  them  eight 
or  nine  years  prior  to  the  tune  when,  in  April  or 
May,  1912,  he  testified  as  a  witness  (R.  174).  N.  C. 
Farnum  testified  that  there  was  a  well  there  before 
1904  (R.  498-9)  ;  and  these  wells  are  shown  on  the 


185 

Barlow  &  Hill  map  of  the  McKittrick  oil  fields, 
Exhibit  Ha,  already  referred  to.  It  thus  appears 
that  before  patent  wells  had  been  drilled  and  had 
found  oil  in  the  very  structure  which  Owen  showed 
running  through  the  lands  in  suit.  It  also  is  shown 
that  within  two  miles  of  the  lands  in  suit  the  oil 
sands  outcropped  and  that  within  less  than  three 
miles  there  were  iDroducing  oil  wells.  Undoubtedly, 
these  were  among  the  things  that  induced  Dr. 
Branner  to  say  that  no  competent  geologist  would 
in  1904  have  failed  to  form  the  opinion  that  these 
lands  were  oil  lands.  Owen  was  in  and  repeatedly 
over  this  region  and  upon  the  lands  in  suit  at  that 
time  and  he  was  a  competent  geologist.  It  is  not 
matter  of  wonder,  then,  that  he  formed  the  correct 
conclusion;  nor  is  it  surprising  that  he  and  Pro- 
fessor Humble,  whose  diligence  in  behalf  of  gaining 
information  for  appellants  was  second  only  to  their 
forehandedness  in  securing  for  themselves  oil  lands 
by  agricultural  entries  and  otherwise,  located  even- 
numbered  or  non-railroad  lauds  in  the  Elk  Hills. 

It  is  beyond  question  that  section  31  of  30-23  was 
in  the  third  class  of  lands  to  which  Humble  referred 
in  the  notable  letter  to  Mr.  Kruttschnitt,  Exhibit  119, 
already  quoted,  in  which  he  classified  the  lands  to  be 
transferred  to  the  Kern  Trading  &  Oil  Company  as 
"proven",  "very  probable"  and  "probable".  This 
third  class,  he  wrote,  "depends  in  part  upon  the  con- 
tinuance of  normal  dips  and  conditions,  but  in 
addition  it  represents  untested  anticlinals  which 
show  good  indications  of  oil",  obviously  having  in 


186 

mind  the  wells  tlien  on  section  6  of  30-22,  the  very 
anticlinal  formation  running  through  the  Elk  Hills 
(E.  2913).  Thus,  again,  the  geological  connection 
between  the  lands  in  suit  and  the  surrounding  oil 
territory  is  not  onlv^  shown,  but  is  seen  to  have  been 
understood  and  appreciated  bj^  appellants'  chief 
geologist  even  before  patent. 

Nor  can  there  be  doubt  that  the  lands  in  the  Elk 
Hills  and  especially  those  on  the  anticline  so  clearly 
drawn  by  Professor  Owen  on  Exhibit  157,  already 
referred  to,  and  running  through  the  very  lands  in 
suit,  were  in  his  mind  when  he  reported : 

"The  fold  north  of  the  McKittrick  and  run- 
ning nearly  parallel  passes  through  sections  5-9 
between  11  and  15  through  13  of  town  30  R.  22. 
This  fold  exposes  the  oil  sands  in  severed  places 
and  in  some  of  the  exposures  the  sands  are 
strongly  impregnated  ivith  asph  and  producing 
wells  ought  to  he  found  along  this  exposure." 
(Italics  supplied.)    (R.  1617.) 

This  letter  was  written  March  25,  1903,  was  ad- 
dressed to  Professor  Humble  and  is  an  unanswerable 
document  showing  Owen's  knowledge  of  conditions 
generally  and  his  full  appreciation  of  the  relation 
of  the  Elk  Hills,  the  lands  in  suit,  to  the  surrounding 
oil  territory.  The  Elk  Hills  anticline,  as  traced  by 
him  on  appellants'  Exhibit  157,  is  the  fold  or 
anticline — geologically  "fold"  and  "anticline"  are 
synonymous  and  interchangeable  words — north  of 
the  McKittrick  fold  or  anticline  "and  running 
nearly  parallel"  and  it  continues  on  into  the  Elk 
Hills  and  through  the  lands  in  suit.     Owen  recog- 


187 

nized  and  appreciated  the  significance  of  this  con- 
nection of  unproven  territory  with  proven  and  con- 
fidently predicted,  reasoning  from  the  certain  to  the 
probable,  that  ''producing  wells  ought  to  be  found 
along  this  exposure".  As  already  seen,  there  were 
at  that  time  oil  wells  on  section  6  of  30-22  through 
which  the  same  anticline  or  fold  runs.  (The  Owen 
letter  in  question  appears  at  pages  1615-1620  of  the 
record.)  Exhibits  4Sa  and  4Sb,  pp.  44  and  45  of 
the  plat  book  which  Owen  kept  with  him  in  the 
field,  show  the  same  anticline  and  indicate  the  land 
here  in  suit  as  "possible  oil  lands". 

Furthermore,  Prof.  Owen  in  this  same  letter 
savs : 

"In  the  direction  of  Midway  I  find  that  the 
McKittrick  fold  flattens  out  in  the  valley,  but 
other  hills  further  on  in  the  same  direction 
would  indicate  that  it  may  extend  to  near  the 
Kern  Lake."  (R.  1617-18.) 

Kern  Lake  is  in  township  31-27;  so  that  Owen's 
view  of  the  persistence  of  oil  sands  goes  far  beyond 
the  requirements  of  Veatch's  so-called  horizon  theory 
and  is  in  direct  conflict  with  the  narrow  zone  view 
which  Anderson  ascribed  to  himself. 

The  closing  paragraph  of  the  letter  in  question 
is  eloquent  of  Owen's  recognition  of  the  connection 
of  the  Elk  Hills  and  the  lands  in  suit  with  the 
known  oil  territory.    He  writes: 

"I  have  located  the  outcrop  of  the  horizon  all 
the  way  to  the  Sunset  oil  field  and  find  there  is 
but  one  oil  sand,  and  I  believe  it  tviU  he  possible 


188 

to  trace  the  same  Iwrizon  to  the  Kern  River 
fields.  There  are  several  reasons  for  believing 
tliev  all  belong  to  the  same  zone."  (Italics 
supplied.)    (R,.^1620.) 

It  is  thus  seen  that  he  had  traced  from  McKittrick 
to  Sunset  the  exposures  or  outcrop  of  the  oil  bear- 
ing sands  and  that  he  believed  that  these  sands 
extended  all  the  way  to  the  Kern  Eiver  fields  and 
that  it  was  all  the  same  sand.  From  McKittrick 
to  Sunset  is  about  thirty  miles  and  from  the  center 
of  the  line  of  outcrop  from  McKittrick  to  Sunset 
to  the  Kern  Eiver  fields  is  twentv-eight  miles. 
Throughout  this  entire  area  Owen,  the  field  geologist 
of  appellants  who  was  in  and  about  McKittrick 
from  early  in  1903  to  long  after  patent,  December  12, 
1904,  believed  that  there  was  but  one  oil  sand.  In 
this  he  was  in  entire  accord  with  Dr.  Branner, 
Mr.  Veatch  and,  indeed,  all  of  the  witnesses  except 
one  or  two  geologists  of  appellants  who  evolved  the 
specious  and  convenient  theory  that  there  were  sev- 
eral oil  sands  and  that  they  had  no  connection  with 
each  other.  Owen,  in  fact,  differed  with  Dr.  Branner 
and  Mr.  Veatch  in  that  he  went  far  bej^ond  them 
in  his  view  of  the  persistency  of  the  oil  sands.  He 
connected  the  distant  Kern  River  fields  with  the 
Coalinga-to-Sunset  field  and  believed  them  the  same 
in  origin — and  he  was  the  expert,  trusted  servant  of 
appellants  and  lieutenant  of  their  chief  geologist. 
Prof.  Dumble,  who  paid  him  the  tribute  of  saying 
that  he  "was  a  very  remarkable  man",  meaning 
*'that  he  had  a  faculty  of  carrying  underground 
conditions  in  his  mind  more  perfectly  than  any  man 
I  ever  met".    (E.  3037.) 


189 

No  question  arises  upon  this  record  of  the  outcrop 
to  the  west  of  the  lands  in  suit  at  places  no  farther 
away  than  two  or  three  miles.  No  question  arises 
as  to  the  dip  of  the  oil-bearing  formation  or  strata 
towards  the  lands  in  suit.  In  1899  oil  had  begun  to 
be  produced  in  the  Kern  Eiver  fields,  twenty-eight 
miles  to  the  east  of  the  lands  in  suit,  from  sands 
which  Prof.  Owen  believed  to  be  the  same  sands 
outcropping  from  Coalinga  to  Sunset.  The  testi- 
mony fully  establishes  the  existence  in  the  im- 
mediate midst  of  the  lands  in  suit  of  oil-bearing 
sands  and  proves  that  Owen  knew  of  this  outcrop 
and  believed  in  it.  Is  there  occasion  for  surprise 
then  that  he  believed  in  the  oil  character  of  the 
lands  in  suit?  That-  he  did  so  believe  and  acted 
upon  his  belief  will  be  the  subject  of  later  treat- 
ment. Pause  is  made  here  merely  to  point  out  that, 
from  the  record,  from  the  standpoint  of  Dr.  Bran- 
ner,  Veatch  and  others,  all  of  the  elements  com- 
bine to  complete  the  perfect  parallel  between  the 
instant  case  and  the  Diamond  Coal  and  Coke  Com- 
pany case. 

Prof.  E.  T.  Dumble  testified  that,  if  in  1902  he 
had  found  an  actual  oil  seep  in  a  break  in  section  32 
of  30-24  and  the  same  was  taken  in  connection  with 
the  anticlinal  structure  found  by  Owen,  he  would 
have  regarded  the  lands  in  that  vicinity  in  the 
Elk  Hills  as  favorable  to  expect  the  occurrence  of 
oil  there  (R-  3039)  ;  and  this  comes  from  appellants' 
chief  geologist  who  himself  had  made  no  examination 
of  the  Elk  Hills  country  at  that  time   (R.  3040). 


190 

The  surroundings  must  have  been  very  suggestive, 
very  impressive,  and  their  geological  relation  to  the 
lands  in  suit  very  evident  and  persuasive  to  wrest 
from  him  so  damaging  an  admission!  For  what  he 
says  amounts  to  this:  if  to  his  knowledge,  prior  to 
patent,  of  the  outcrop,  exposures  and  wells  to  the 
west  and  in  the  vicinity  of  the  lands  in  suit  in 
strata  dipping  away  from  the  Temblor  Range  and 
towards  the  valley  and  the  lands  in  suit,  together 
with  the  fact  that  oil  had  been  developed  com- 
mercially in  the  Kern  River  fields  many  miles  to 
the  east,  there  had  been  added  knowledge  of  the 
exposure  or  deposit  in  section  32  of  30-24,  he  would 
have  pronounced  the  lands  in  suit  oil  lands.  His 
admission  shows  that,  had  he  had  Owen's  knowl- 
edge, he  would  have  entertained  unreservedly  Owen's 
belief.  Of  the  belief  of  both  of  them  more  will 
follow  later  herein.  His  self -ascribed  lack  of  belief, 
clearly,  is  predicated  upon  his  lack  of  opportunity 
to  examine. 

The  relation  of  the  surrounding  country  to  the 
lands  in  suit  has  been  shown  to  be  such  that  ap- 
pellants' chief  geologist  would,  if  he  had  known  of 
the  deposit  or  seepage  on  32  of  30-24,  upon  it  have 
predicated  the  oil  character  of  the  lands  in  suit. 
Having  that  information,  Owen,  another  of  their 
geologists,  believed  the  lands  to  be  of  oil  character; 
and  Anderson,  the  only  other  geologist  whom  they 
had  at  the  period  in  question,  placed  himself  along- 
side of  Dumble  and  admitted  that,  if  he  had  known 
of  the  deposit  in  32  of  30-24,  he  would  temporarily 


191 

have  believed  the  Elk  Hills  to  be  oil  lands  (E.  2626). 
It  is  already  shown  that  of  the  three  Owen  was  the 
only  one  who  had  been  in  the  Elk  Hills  prior  to 
1905.  Owen  was  the  geologist  who  reported  on  the 
lands  to  be  leased  to  the  Kern  Trading  &  Oil 
Company.  He  was  the  field  geologist  and  questions 
important  and  mighty  were  committed  to  his  de- 
cision. As  will  hereafter  be  shown,  both  he  and 
Dmnble  thought  so  well  of  the  Elk  Hills  that  they 
sought  to  acquire  for  themselves  lands  therein.  It  is 
true  that  Dumble  testified  that  he  thought  he  could 
say  positively  that  Owen  did  not  tell  him  of  the 
deposit  in  32  of  30-24;  but  the  fact  remains  that 
he  did  not  swear  that  he  did  not  and  he,  in  making 
locations,  acted  as  if  Owen  had  told  him. 

7.     NON-AGRICULTURAL  CHARACTER  OF  THE  LANDS 

IN  SUIT. 

That  the  lands  in  suit  are  wholly  without  value 
for  agriculture  and  are  totally  worthless  for  any 
other  than  oil  purposes  convincingh^  appears  from 
the  evidence.  That  this  is  true  will  appear  more 
material  when  later  in  this  brief  the  solicitude  and 
extraordinary  efforts  of  appellants  to  secure  patent 
thereto  are  shown. 

First  will  be  brieflv  recited  the  testimonv  of 
numerous  government  witnesses  upon  this  question, 
followed  by  the  testimony  of  a  number  of  appellants' 
witnesses  to  the  same  effect. 

S.  G.  Drouillard  testified  that  the  Elk  Hills  had  no 
value  for  crops;  that  early  in  the  Spring,  for  about 


192 

two  or  three  months,  the  land  had  some  value  for 
grazing  purposes;  but  that  there  is  no  possibility 
of  water  for  irrigation  purposes  unless  it  could  be 
gotten  by  artesian  wells,  there  being  no  surface 
indication  of  water  and  the  country  being  badly 
broken  and  cut  up  by  small,  short  canyons  (R.  117). 

John  Jean  testified  that  the  general  formation  of 
the  surface  is  broken,  reminding  him  of  an  ash-pit  ; 
that  there  is  a  little  sage  brush  now  and  then  in  the 
hills  and  that  part  of  it  ma}"  be  susceptible  of  agri- 
cultural development  and  part  of  it  not;  that  he 
did  not  know  whether  crops  could  be  raised,  never 
having  seen  it  tried  (E.  129). 

F.  J.  Sarnow  testified  that  the  lands  are  not 
valuable  for  agriculture,  the  surface  of  the  ground 
being  rough  and  barren  and  the  only  vegetation 
some  sage-brush,  unless  there  is  an  amount  of  rain, 
when  a  little  grass  grows  which  does  not  remain  very 
long  (R.  165).  He  also  stated  that  there  is  no 
water  there  and  that  the  land  is  not  susceptible  of 
economic  agriculture  (R.  181). 

B.  K.  Lee  testified  that  he  never  saw  any  water 
in  there  and  very  little  vegetation,  what  little  vege- 
tation there  was  consisting  of  sparse  sage-brush  and 
some  grass ;  that  the  hills  are  rather  barren  and  not 
susceptible  of  agriculture  and  have  only  a  slight 
value  for  grazing  (R.  228). 

J.  I.  Wagy  testified  that  he  had  been  over  every 
section  and  that  the  lands  are  without  value  for 


193 

agTiculture ;  that  since  he  had  been  in  the  country 
there  was  not  sufficient  rainfall  to  raise  a  crop; 
that  the  surface  is  too  rough,  the  climate  being 
rather  a  dry,  warm,  desert  climate,  but  that  in 
ordinary  years  during  sixty  or  ninety  days  there 
was  sufficient  vegetation  to  graze  sheep  (R.  248-9). 

I.  N.  Chapman  testified  that  the  Elk  Hills  were 
dry  and  parched  when  he  was  there ;  that  their  ele- 
vation is  about  seven  hundred  feet  and  that  they 
did  not  seem  to  be  very  valuable  for  agriculture 
(R.  316). 

S.  P.  Wible  testified  that  the  lands  in  30-23  have 
absolutely  no  value  for  agricultural  purposes  as  they 
are  too  hillv  to  be  cultivated  and  there  is  not 
enough  level  land  to  do  anything  with;  that  in  the 
Spring  of  the  year  they  have  some  value  for 
pasturage,  but  that  this  is  true  only  in  a  good 
season  and  that  the  value  of  the  lands  is  for 
mineral  (R.  324). 

W.  G.  Sylvester  testified  that:  "As  to  the  agri- 
cultural possibilities  of  the  Elk  Hills  for  raising 
crops  I  think  a  man  would  have  a  picnic  raising  a 
crop  there,  as  the  hills  are  pretty  steep'  and  there 
is  absolutely  no  water"  (R.  358). 

Jacob  Kaerth  testified  that  he  did  not  consider 
the  lands  of  any  value  for  agricultural  purposes, 
they  being  bare,  very  rough  and  precipitous  and 
cut  up  badly  by  gulches  and  ravines  and  having  no 
water  (R.  418). 


194 

H.  P.  Dover  testified:  "The  Elk  Hills  have  no 
value  for  crop  raising  or  agricultural  pursuits  that 
I  have  ever  known  of.  For  farming  it  was  no  good. 
It  was  rough  and  dry.  Nothing  seemed  to  grow 
there.  In  the  Spring  of  the  year  of  a  wet  Spring 
there  might  be  a  little  feed  for  a  month  or  so.  The 
chief  value  of  the  Elk  Hills  is  for  oil,  if  for  any- 
thing" (E.  462). 

C.  F.  Whittier  testified  that  the  Elk  Hills  have 
not  much  value  for  grazing,  there  being  nothing 
there  to  keep  the  stock  long;  that  they  could  not 
live  while  they  were  going  across;  that  there  had 
been  some  sheep  around  through  the  country  there ; 
and  that  he  did  not  know  of  any  use  that  had  been 
made  of  the  land  (R.  475). 

Frank  Barrett  testified:  "As  to  their  value 
aside  from  the  oil  value,  I  do  not  think  you  could 
raise  a  black-eyed  pea  on  them,  I  would  not  have 
them  to  pay  taxes  on  them  for  agriculture.  I  do 
not  think  they  have  any  value  at  all  for  agri- 
cultural purposes — for  raising  crops.  As  to  their 
value  for  grazing,  I  suppose  when  the  winter  rains 
occur  the  filaree  would  grow  there,  but  it  would  not 
last  very  long,  probably  not  over  six  weeks  or  two 
months  in  a  very  good  season"  (E.  481). 

M.  T.  Hubbard  testified  that  if  the  Elk  Hills  had 
no  value  for  oil,  he  did  not  think  them  worth  any- 
thing (E.  491). 

N.  C.  Farnum  testified  that  township  30-23  has  a 


195 

value  as  oil  land  and  nothing  else  unless  for  gypsum 
or  fullers-earth  (R.  508). 

Parker  Barrett  testified  that  the  Elk  Hills,  in- 
cluding township  30-23,  have  no  value  for  agricul- 
ture ;  that  he  could  not  say  that  they  had  absolutely 
no  value  for  grazing,  but  that  they  did  have  a  little 
value  for  that ;  that  sheep  occasionally  ranged  across 
there  and  found  very  little  feed  even  in  a  good  sea- 
son; his  reason  for  saying  that  they  have  no  agri- 
cultural value  being  that  ver}^  little  of  the  land  lies 
so  that,  even  if  there  were  water  on  it,  it  could  be 
cultivated;  that,  if  you  turned  water  on  a  good  deal 
of  it,  it  would  all  wash  away  (R.  526). 

W.  H.  McKittrick  testified  that  the  Elk  Hills  are 
absolutely  worthless  for  agricultural  purposes;  that 
a  sheep  man  would  not  pay  taxes  on  it  even  as  a 
grazing  proposition;  that  he  never  saw  a  drop  of 
water  all  through  there;  and  that  the  surface  is  so 
eroded  that  nothing  could  be  done  in  the  way  of  agri- 
culture, even  if  there  were  water  (R.  539). 

W.  E.  Youle  testified  that  the  lands  have  no  value 
other  than  for  the  purpose  of  drilling  for  oil  (R. 
577). 

Chas.  W.  Lamont  testified  that  he  had  been  over 
most  of  the  Elk  Hills  in  30-23  and  30-24  and  that  he 
did  not  think  the  lands  valuable  for  agriculture  and 
had  never  found  any  water  there;  that  he  had  of- 
fered to  rent  the  ground  that  he  had  located  for  ten 
dollars  a  section  to  a  sheep  man,  but  the  sheep  man 


196 

would  not  give  it  unless  he  would  agree  to  put  water 
there  (R.  582). 

F.  Oskar  Martin  testified  that  he  had  examined  the 
soils  of  the  lands  involved  in  this  suit  and  had  found 
them  residual  gravely  sand;  that  on  that  account 
their  drainage  would  be  excellent,  but  that  for  the 
same  reason  they  are  not  capable  of  retaining  suf- 
ficient soil  moisture  to  induce  plant  growth ;  that  in 
view  of  the  slight  rainfall  it  was  apparent  to  him 
that  no  agricultural  crops  could  be  raised  on  them; 
that  he  saw  evidences  on  the  west  half  of  section  16 
of  30-23  that  about  ten  acres  of  land  had  been  plowed 
or  scraped  over ;  that  he  found  a  stack  of  barley,  but 
that  the  crop  had  not  been  a  plentiful  one  and  had 
not  matured  (R,  615). 

Jas.  M.  Gleaves  identified  copy  of  plat  of  survey 
of  30-23,  approved  by  the  Surveyor  General  of  Cali- 
fornia August  1.  1902,  marked  plaintiff's  Exhibit 
''E"  and  showing  that  the  lands  in  suit  were  re- 
turned by  the  Surveyor  General  as  mineral  lands 
(R.  107). 

The  following  is  from  the  testimony  of  wit- 
nesses for  appellants : 

J.  B.  Treadwell,  oil  expert  of  appellants  in  charge 
of  their  operations  in  the  region  around  McKittrick 
prior  to  patent,  admitted  while  on  the  stand  as  a 
witness  for  appellants  that  the  lands  in  suit  had  no 
agricultural  value  at  all  except  for  grazing  in  the 
Spring  of  the  year  (R.  3473). 


197 

L.  D.  Bell  testified  that  he  knew  the  value  of  agri- 
cultural lands  in  the  region  in  question,  having  been 
in  the  business  of  agriculture  and  grazing  for  a  num- 
ber of  years,  and  that  the  Elk  Hills  have  no  value 
for  agriculture  or  farming  (R.  1805). 

H.  J.  Hart  testified  that  the  lands  would  be 
valuable  for  agricultural  purposes,  if  water  could 
begotten  (E.  2112). 

T.  M.  Storke  testified  that  he  would  not  give  eight- 
een cents  an  acre  for  the  whole  Elk  Hills  for  anv 
purpose  (R.  2045). 

John  Lang  testified  that  except  for  about  four 
months  the  season  in  the  Elk  Hills  was  dry  and  that 
they  were  absolutely  valueless  except  for  the  miner- 
als that  they  contained ;  that  personally  he  would  not 
give  much  for  them  as  a  grazing  proposition  (R. 
1967). 

Samuel  Shannon  testified:  "The  Elk  Hills  are  a 
desert  country  not  absolutely  devoid  of  desert  vege- 
tation, but  of  a  desert  character;  a  region  of  very 
light  rainfall  and  sparse  sagebrush.  The  Elk  Hills 
are  a  barren  group  of  hills  somewhat  similar  in  ap- 
pearance to  the  Buena  Vista  Hills"  (R.  2143). 

W.  H.  Cooley  testified  that,  while  the  lands  would 
be  very  prolific  if  there  were  water,  he  did  not  know 
of  any  chance  to  get  water  and  that  he  did  not  think 
that  they  had  any  value  as  farming  lands  (R.  1815). 

R.  K.  Howk  testified  that  the  lands  in  the  Elk  Hills 
in  their  present  condition  have  absolutely  no  value 
for  agricultural  purposes  (R.  1849). 


198 

It  is  submitted  that,  in  view  of  the  foregoing 
evidence,  there  can  be  no  question  that  the  Elk  Hills 
are  without  substantial  value  except  for  the  miner- 
als which  they  contain,  insomuch  that,  if  the  question 
were  to  be  determined  in  the  first  instance  by  this 
court,  it  must  be  resolved  in  favor  of  the  govern- 
ment; a  fortiori,  there  is  nothing  in  the  findings  of 
the  lower  court  even  suggestive  of  palpable  or  mani- 
fest error. 

L.  J.  King,  superintendent  of  oil  properties  of 
the  Associated  Oil  Company,  a  subsidiary  of  the 
Southern  Pacific  Company,  called  as  a  witness  in  a 
mineral  contest  before  the  land  officers  at  Visalia, 
testified  that  the  land  in  the  Elk  Hills  cannot  be  cul- 
tivated because  it  is  rolling  and  uneven,  without 
artificial  irrigation,  and  even  then  is  not  susceptible 
of  cultivation ;  it  has  no  agricultural  value  and  a  ren- 
tal value  of  ten  cents  per  acre  per  annum  for  graz- 
ing purposes ;  contains  no  vegetation  except  scattered 
growth  of  sage-brush  and  is  without  water  by  stream 
or  springs.  He  said  that  section  26  adjoining  the 
lands  in  suit  was  chiefly  valuable  for  oil,  particular- 
izing the  section  which  was  involved  in  the  contest. 
Exhilnt  9-R. 

T.  E.  Barnes,  testifying  under  the  same  circum- 
stances and  with  the  same  connections,  said  the  Elk 
Hills  could  not  be  cultivated  without  artificial  irri- 
gation. They  are  rolling  and  uneven,  the  land  pos- 
sesses no  agricultural  value  and  but  a  nominal  value 
of  ten  cents  per  acre  per  annum  for  grazing.     Xo 


199 

vegetation  exists  except  a  scattering  growth  of 
sage-brush  and  the  hills  are  cut  with  no  streams  and 
contain  no  snrino's.  He  also  said  section  26  was 
chiefly  valuable  for  oil.    Exhibits  9-F ;  9-N,  and  9-E. 

B.     BELIEF,  GENERAL  AND  SPECIFIC. 

In  the  Diamond  Coal  and  Coke  Company  case  the 
court,  after  reviewing  the  testimony  concerning  the 
known  physical  indicia  upon  which  the  expert  for 
the  government,  whose  views  were  adopted,  based 
his  conclusion  that  the  lands  there  in  suit  were  coal 
lands,  sets  out  certain  conduct  on  the  part  of  the 
coal  company  which  indicated  its  belief  in  this  coal 
character,  stating  that  the  conclusion  reached  by  the 
expert  "had  substantial  support"  in  the  conduct  in 
question.    The  following  is  the  pertinent  passage : 

"The  expert  for  the  government  proceeded 
upon  the  theory  that,  when  the  known  surround- 
ings are  such  that  practical  coal  men  would  in- 
vest in  particular  lands  for  coal  mining  or  ad- 
vise others  to  do  so,  those  lands  are  to  be  deemed 
coal  lands,  even  though  coal  has  not  as  yet  ac- 
tually been  disclosed  within  their  limits.  And 
having  in  mind  the  outcropping  coal  bed,  the 
direction  and  inclination  of  its  dip,  the  char- 
acter of  the  rocks  with  which  it  was  interstrati- 
fied,  the  quality  and  thickness  of  the  coal  at  the 
outcrop,  the  proximity  of  the  lands  to  the  out- 
crop and  the  topographical  and  structural  fea- 
tures of  the  vicinity,  he  gave  it  as  his  opinion 
that  the  coal  bed  extended  into  and  through  the 
lands  in  question  and  that  practical  coal  men 
would  regard  the  lands  as  valuable  for  coal  and 
invest  in  them  as  such.  He  accordingly  pro- 
nounced them  coal  lands  within  his  acceptation 
of  that  term.     This  conclusion  had  substantial 


200 

support,  not  only  in  the  facts  already  recited, 
but  also  in  the  fact  that  the  company's  maps, 
made  three  years  before  the  suit  was  begun, 
showed  that  it  was  intended  to  project  its  min- 
ing operations  westward  from  the  outcrop  a 
mile  and  a  half  and  had  designated  the  inter- 
vening lands,  which  included  some  of  those  in 
controversy,  as  coal  lands,  and  in  the  further 
fact  that  the  company  had  returned  lands  ex- 
tending westward  a  similar  distance,  likewise 
including  some  now  in  controversy,  as  exempt 
from  direct  taxation  by  reason  of  a  local  statute 
substituting  an  output  tax  upon  coal  mines. 
Laws  Wyo.  1903,  chapter  81,  p.  101.  The  return 
for  the  year  in  which  the  maps  were  made  claim- 
ed an  exemption  of  substantially  six  sections  in 
two  tiers  of  three  sections  each,  although  the 
work  of  developing  the  mine  (No.  4),  as  shown 
by  the  maps,  was  still  within  the  east  half  of  the 
middle  section  in  the  eastern  tier."    (Page  942.) 

The  Supreme  Court  proceeded  upon  the  basis  that, 
the  question  being  whether  a  given  belief  would  be 
engendered  by  certain  found  conditions,  proof  that 
that  belief  was  engendered  was  competent  to  show 
the  probative  value  and  effort  of  the  found  con- 
ditions. Holding  that  the  kno\^Ta  conditions  were 
such  as  to  engender  the  belief,  it  checked  its  own 
conclusion  by  conduct  on  the  part  of  the  defendants 
showing  that,  with  no  knowledge  other  than  that  fur- 
nished by  the  known  conditions,  they  entertained 
that  belief. 

This  record  is  writ  large  with  evidence  showing 
the  belief  of  appellants  in  the  oil  character  of  the 
lands  in  suit,  that  belief  appearing  both  in  the  words 
and  acts  of  various  responsible  officers  and  agents  of 


201 

the  Southern  Pacific  Company  and  the  Southern 
Pacific  Bailroad  ComiDany.  There  is  also  much  testi- 
mony as  to  the  general  belief  in  and  notoriety  of  the 
oil  character  of  these  lands,  as  well  as  of  the  belief 
of  individuals.  Accordingly,  first  will  be  set  out  the 
evidence  of  general  belief  in  and  notoriety  of  the  oil 
character  of  the  lands  in  suit;  next,  evidence  of  the 
belief  of  appellants;  and  last,  evidence  of  the  belief 
of  individuals  not  connected  with  appellants. 

1.  General  belief  in  and  notoriety  of  the  oil  character  of  the  lands 
in  suit. 

The  evidence  in  support  of  the  contention  that 
there  was  prior  to  patent  general  belief  in  and  no- 
toriety of  the  oil  character  of  the  lands  in  suit  fol- 
lows. It  is  not  suggested  that  this  was  one  of  the 
conditions  which  showed  the  lands  oil  lands,  but  that 
it  is  related  to  those  conditions  as  effect  is  related 
to  cause,  it  plainly  appearing  that  those  conditions 
led  to  the  belief  and  caused  the  notoriety  in  ques- 
tion. The  evidence  incidentally  demonstrates  knowl- 
edge by  the  appellants  of  the  knoT\ai  conditions. 

S.  G.  Drouillard  testified  that  the  Elk  Hills  looked 
as  good  as  any  other  land  in  that  country  and  in  1899 
was  generally  regarded  by  competent  oil  men  as  oil 
territory,  everyone  who  saw  it,  people  that  were  sup- 
posed to  be  oil  men,  saying  that  it  was  good  oil  land 
(K.  122).  He  further  stated  that  there  were  num- 
erous locations  and  that  the  lands  were  supposed  to 
be  in  the  oil  belt  and  all  of  the  ground  that  was  in 
the  oil  belt  was  supposed  to  be  oil  land  (R.  124) ;  and 


202 

tliat  people  regarded  the  entire  buncli  of  hills  known 
as  the  Elk  Hills  as  good  oil  territory,  township  30- 
23  being  located  in  the  middle  of  the  Elk  Hills  and 
being  regarded  as  good  oil  territory  (E.  125). 

John  Jean  testified  that  the  Elk  Hills  were  re- 
garded as  oil  territory  in  1904  and  that  he  regarded 
them  as  snch  and  would  not  otherwise  have  made 
locations  there  (E.  131). 

L.  G.  Sarnow  testified  that  he  thought  the  Elk 
Hills  good  for  oil  and  that  J.  B.  Trea dwell,  oil  ex- 
pert of  the  Southern  Pacific  Company,  thought  them 
good  for  oil,  but  that  both  of  them  thought  that  it 
was  deep  (E.  135).  He  further  stated  that  in  his 
opinion  a  competent  geologist,  who  knew  the  forma- 
tion of  the  Elk  Hills,  its  comparison  and  similarity 
to  the  general  McKittrick  formation  along  the  east- 
ern flank  of  the  Temblor  Eange,  the  develoxmient  of 
oil  sands  by  actual  drilling  along  the  Temblor  flank 
from  Sunset  to  McKittrick,  the  oil  seep  that  he  had 
mentioned  in  the  Elk  Hills  and  such  other  evidences 
of  oil  character  as  were  plainly  conspicuous  upon  the 
ground,  would  in  1904  have  reconnnended  the  invest- 
ment of  money  in  the  Elk  Hills  with  reasonable  ex- 
pectation of  developing  paying  oil  property  (E.  139- 
140).  He  also  stated  that,  even  if  the  samples  taken 
from  the  blow-out  in  32  of  30-24  failed  to  respond 
to  tests  for  j^etroleum  made  by  competent  and  dis- 
interested persons  according  to  the  best  approved 
methods,  he  would  still  say  that  it  was  a  cinch  that 
the  lands  were  oil  hinds  (E.  142). 


203 

F.  D.  Lowe  testified  that  prior  to  patent  he  talked 
with  people  whose  opinion  was  worth  something  and 
that  they  believed  that  there  was  oil  in  the   Elk 
Hills,  C.  A.  Barlow,  a  witness  for  appellants,  among 
others,    saying   "I    don't    doubt   it".      He    further 
stated  that  people  believed  that  oil  was   there   in 
paying  quantities  and  that  that  belief  was  generally 
entertained  by  men  interested  in  the  commerical  pro- 
duction of  oil  and  in  the  business  at  that  time  (E. 
149-150).     He  further  stated  that,  Avhile  no  pros- 
pectus was  ever  gotten  out  by  his   company,    the 
Lakeview  Oil  Company  got  out  one  in  the  Summer 
of  1901,  when  his  company  was  down  about  500  feet 
in  the  Elk  Hills,  and  in  it  stated  that  there  was 
every  indication  of  his  striking  oil  (R.  150).    Noth- 
ing occurred  from  the  time  he  made  his  location  in 
section  11  of  31-24  until  the  fall  of  1904  to  change 
his  opinion  of  the  territory  as  oil  property.    He  still 
held  to  the  opinion  that  there  was  oil  there  and  still 
believed  that  it  was  a  good  oil  country   (R.   151). 
The  opinion  of  oil  men  of  this  land  was  good  and 
their  opinion  was  that  there  was  oil  underneath  the 
surface.    C.  A.  Barlow  told  him  that  he  didn't  doubt 
that  it  was  good  oil  land.    The  McCutchens,  who  are 
drillers  and  operators  in  the  Sunset  field  and  with 
whom  he  talked,  in  1901,  1902  and  1903,  were  of  the 
opinion  that  the  land  was  good  and  believed  that 
there  was  oil  there  (R.  152). 

Ira  M.  Anderson,  stating  that  the  Sunset,  McKit- 
trick  and  Midwav  fields  are  all  about  the  same  and 
that  the  existence  of  oil  evidences  there  were  known 


204 

in  general  to  the  people  around  there  at  that  thne, 
testified  that  the  chloroform  test  which  he  made  of 
the  earth,  rock  and  shale  in  the  Elk  Hills  showed 
oil  and  oil  sand  and  that  the  formation  was  there 
to  show  that  the  Elk  Hills  were  in  his  oj)inion  oil  pro- 
ducing territory.  He  found  blow-outs  in  the  Elk 
Hills  (E.  156). 

F.  J.  Sarnow  testified  that  he  had  been  in  the  Elk 
Hills  and  considered  them  oil  territory,  although 
expensive ;  that  he  talked  with  Treadwell  about  dif- 
ferent lands  and  that  Treadwell  thought  there  was 
oil  in  the  Elk  Hills,  although  it  would  be  expensive 
(R.  165),  explaining  that  it  was  expensive  because 
there  was  no  water  in  that  country  (E.  171). 

M.  S.  Wagy  testified  that  prior  to  patent  he  lo- 
cated lands  in  30-23  and  30-24,  eight  or  ten  sections 
(E.  177) ;  about  as  early  as  1899  he  regarded  the  Elk 
Hills  as  oil  territory  because  there  were  the  same 
indications  there  as  where  he  was  getting  oil  and 
better  indications  than  in  the  Kern  Elver  field 
where  oil  was  being  produced;  that  he  talked  with 
Silas  Drouillard  about  the  Elk  Hills  and  that  he, 
Drouillard,  in  1900-1901,  thought  they  were  good  (E. 
180).  He  further  stated  that  he  knew  Josiah  Owen 
and  talked  with  him  in  1900.  Owen  thought  that 
that  was  an  oil  district  (E.  182-3). 

B.  K.  Lee  investigated  lands  in  the  Elk  Hills  in 
1903  and  upon  his  recommendation  159  acres  in 
section  36  of  30-23  were  bought  for  mineral  possi- 
bilities for  oil.    He  found  more  clays  and  sands  ex- 


205 

posed  in  30-23  than  in  the  country  immediately  ad- 
joining the  McKittrick  oil  field  and  recommended 
the  purchase  of  the  lands  for  their  oil  value  (E.  229). 
Josiah  Owen  told  him  that  the  Buena  Yista  Hills 
was  a  great  gas  country;  that  he  had  found  evi- 
dences of  gas  there  in  eleven  different  places  where 
he  could  stick  a  bar  into  the  ground  and  get  a  flash 
of  light;  he  also  found  an  oil  sand  in  section  11  of 
32-24  (R.  230). 

J.  I.  Wagy  with  Jewett,  Blodgett  and  Youle, 
pioneer  oil  men  and  operators,  located  all  over  30- 
23,  also  in  30-24,  31-23  and  31-24,  some  50  odd  sec- 
tions, for  oil  (E.  239).  He  discovered  the  seepage 
in  32  of  30-24  in  1900.  He  reported  it  to  Mr.  Blod- 
gett of  the  firm  of  Jewett  &  Blodgett  who  sent  over 
their  oil  expert  Youle  to  examine  it.  Youle  exam- 
ined it  and  said  that  it  looked  pretty  good  to  hun 
and  that  it  was  worth  spending  money  on  (R.  240). 
As  a  result  of  this  a  meeting  was  held,  a  company 
formed  and  the  lands  located.  Surveyors  were  pro- 
cured, surveys  made,  ground  mounded  and  location 
notices  posted  (E.  243).  Witness  said  he  surely 
resarded  the  Elk  Hills  as  oil  territorv  at  that  time 
or  he  would  not  have  spent  his  time  there.  They 
went  on  and  made  locations  on  Youle 's  advice  as 
much  as  am^thing  else  (E.  245).  They  built  a  house 
and  a  stable  and  cut  a  road  on  their  locations  and  had 
a  crew  of  men  digging  shafts  for  several  weeks  (E. 
246).  He  remembered  the  stampede  in  the  Elk 
Hills  about  1901  (E.  247).  They  thought  all  their 
locations  were  oil  lands    (E.   250)    and  spent   $5,- 


206 

000.00  on  tlie  south  half  of  township  30-23  (E.  251) 
which  is  that  portion  of  the  township  occupied  by 
the  lands  in  suit.  In  making  re-locations  which  they 
continued  doing  for  six  or  eight  years  (E.  253)  they 
went  out  at  midnight  and  lay  in  the  sagebrush  to 
"beat  the  other  fellow  to  it"  (E.  254).  The  west- 
ern portion  of  the  Elk  Hills  which  would  include  the 
lands  in  suit  he  considered  to  be  oil-bearing  lands  at 
the  time  of  locating  there  and  at  the  time  of  testi- 
fying in  this  case  since,  as  he  expressed  it,  he  didn't 
know  anything  to  change  his  former  opinion  (E. 
266-7).  He  "most  assuredly  considered  the  Elk 
Hills  oil  territory  or  he  would  not  have  spent  his 
time  and  money  there".  (E.  269.)  In  1912  a  Mr. 
Myers  called  on  witness  looking  for  information  for 
the  Southern  Pacific  Company  in  regard  to  the 
Eik  Hills  and  asked  him  if  he  was  the  Wagy  on  the 
early  locations  in  there  and  on  being  told  that  the 
witness  was,  asked  this  question:  Did  you  consider 
that  oil  territory?  And  the  witness  replied:  "Most 
assuredly  I  did,  or  I  would  not  have  spent  my  time 
and  money  there."  To  this  Myers  rejoined:  "I 
don't  think  you  will  do  me  much  good"  and  bade 
him  good-day  (E.  269-70). 

W.  E.  Ott  testified  that  he  first  went  to  McKittrick 
in  1901  and  that  he  always  thought  there  was  oil  in 
the  Elk  Hills  and  that  it  was  the  general  belief 
among  oil  men  about  McKittrick  that  the  Elk  HiDs 
were  oil  territory;  that  he  heard  it  talked  about  all 
the  time  he  was  there  as  early  as  1901-1902,  and 
Josiah  Owen,  in  speaking  to  him  of  the  territory  in 


207 

general  from  McKittrick  to  Sunset,  which  is  known 
now  as  the  Midway  district,  said  that  it  would  be  a 
great  field  (R.  277)  ;  that  there  was  a  general  be- 
lief amongst  oil  men  that  the  Elk  Hills  w^as  oil 
territory,  all  the  time  he  was  out  in  that  country  and 
up  to  the  present  time  (R.  286).  In  fact  there 
were  rigs  over  in  portions  of  that  field  at  that  time 
which  had  more  or  less  oil  on  them.  Wible  told  him 
the  Elk  Hills  was  oil  territory  in  1901  (R.  286-7). 
Treadwell  also  thought  the  Elk  Hills  was  good  oil 
territory,  as  also  lots  of  oil  men  around  there  (R. 
288).  Youle  and  Blodgett  also  told  him  it  was  oil 
territory  prior  to  January  1,  1905  (R.  290). 

I.  N.  Chapman  about  1893  surveyed  the  eastern 
boundary  of  township  30-23  and  regarded  it  as  very 
probable  oil  land.  "It  is  all  the  right  formation  in 
which  to  find  oil".  That  was  true  of  the  hills  there 
known  as  the  Elk  Hills  and  clear  over  to  the  Car- 
issa  plains  (R.  315).  When  he  spoke  to  the  United 
States  Suiweyor  General  about  the  probability  of  oil 
in  30-23,  the  latter  advised  him  not  to  mention  it  be- 
cause it  was  a  difficult  matter  to  prove.  He  talked 
the  matter  over  with  his  men  there  at  that  time  and 
told  them  that  he  believed  there  would  be  oil  dis- 
covered in  that  country  and  that  there  would  be  a 
great  boom  in  oil  (R.  316).  He  said  a  man  would 
be  justified  in  investing  money  with  a  reasonable 
expectation  of  getting  oil  upon  the  indications  that 
he  saw  (R.  317). 

S.  P.  Wible  discussed  with  Josiah  Owen  the  oil 
possibilities  of  lands  in  the  vicinity  of  McKittrick. 


208 

Owen  was  very  familiar  with  the  formation  of  that 
countiT  and  particularly  with  reference  to  the  Elk 
Hills  including  30-23.     Owen  told  him  that  he  be- 
lieved the  oil  measures  lay  under  the  Buena  Vista 
Hills  and  that  he  thought  they  lay  very  deep  under 
the  Elk  Hills   (R.  320).     Owen  before  1904  spoke 
several  times  about  the  oil  showing  in  section  32  of 
30-24  and  from  a  conversation  concerning  the  Elk 
Hills  as  oil  territory  he  knew  that  Owen  regarded 
them  as  such  (R.  321).     Owen  seemed  to  feel  quite 
sure  that  there  were  oil  lands  in  the  vicinity  of  oil 
croppings  on  32  of  30-21.    The  locations  in  the  Elk 
Hills  in  1901  and  1902  were  not  made  only  by  part- 
ies who  were  speculating  in  the  possibilities  of  oil. 
Most  of  the  operations  were  carried  on  under  the 
advice   of  a   geologist  and    he    considered    Josiah 
Owen  one  of  the  best  in  the  field.     All  of  his  lo- 
cations were  made   on    the    advice    of    competent 
men,    among   whom   he   considered    Treadwell   and 
Youle   under   whose   advice   he   and   his   associates 
made  locations  in  1901   (R.  332).     The  formation 
of   the   lands   in   30-23   and   30-21   is   shale,    sand- 
stone and  clay,  fuller 's-earth  and  gypsum  and  in 
that  formation  fuller 's-earth  and  gypsum  generally 
occur  in  conjunction  with  oil.     Mr.  Owen,  he  said, 
thought  that  the  oil  formation  dipped  very  fast  from 
the  west  towards  the  east  so  as  to  make  it  deeper  in 
the  easterly  end  of  the  field.    If  Mr.  Owen  heard  of 
any  seeps  he  looked  them  up.     Witness  and  Owen 
were  stockholders  in  the  Eight  Oil  Company  which 
located  even-numbered  sections  in  30-23  and  30-21 
for  oil.    Owen  furnished  infoiToation  of  a  geological 


209 

character  of  tlie  holdings  of  the  Eight  Oil  Company. 
"He  showed  several  of  us  the  fuller 's-earth  and 
gypsum  there  and  told  us  that  it  was  possible  that 
the  oil  measures  lay  under  there  at  a  depth  that 
could  be  reached.  At  that  time  we  didn't  think  it 
possible  at  the  depth  that  he  stated  to  drill  profit- 
ably for  oil.  We  had  confidence  in  his  report  so  far 
as  the  existence  of  minerals  was  concerned.  Owen 
put  up  his  share  of  the  money  for  doing  the  develop- 
ment we  did  there  and  the  locations  of  the  lands  and 
the  organization  of  the  company.  Those  lands  were 
located  for  oil,  fuller 's-earth,  gypsum  and  other 
minerals."  The  value  of  that  land,  meaning  the 
lands  in  30-23,  is  for  mineral  (R.  323-4).  Owen 
told  him  "if  the  railroad  selected  those  lands  they 
would  be  selecting  mineral  lands.  In  other  words, 
they  had  no  right  to  select  them  as  he  had  reported 
them  as  mineral  land."  (R.  325.)  It  was  in  1903  or 
the  early  part  of  1904  that  this  conversation  took 
place.  Owen  said  he  was  employed  for  the  purpose 
of  examining  lands  and  classifying  them  as  to  their 
mineral  character.  Witness  testified  that,  as  a  man 
of  experience  in  the  oil-fields,  he  would  not  make  a 
location  of  land  which  had  no  indication  of  mineral 
value  on  the  ground  at  that  time  (R.  327).  "Mr. 
Owen  said  he  belived  the  Elk  Hills  might  contain 
oil.  He  said  the  oil  measures  lay  under  them  and 
he  thought  that  they  were  probably  so  deep  they 
could  not  be  reached  and  made  to  pay.  I  had  some 
conversation  with  him  in  reference  to  some  land  in 
30-23  in  which  he  told  me  that  oil  could  be  reached 
at  3,000  feet  or  over  and  we  didn't  drill  because  we 


210 

didn't  figure  that  it  would  pay  to  drill  for  it."  We 
regarded  3,000  feet  as  prohibitive  from  the  stand- 
point of  cost.  "Mr.  Owen  said  there  was  a  good 
chance."  Continuing,  witness  said:  "At  a  number 
of  places  through  the  Elk  Hills  running  from  north- 
west to  southeast  I  found  evidence  of  an  anticline. 
There  are  two  on  the  east  part  of  it  and  one  on  the 
west.  I  have  heard  it  said,  although  I  have  never 
been  able  to  trace  it,  that  there  are  evidences  of  two 
at  the  west  and  that  they  come  together  at  the  east. 
I  know  what  an  anticline  is.  I  found  both  slopes  of 
the  anticline  running  through  the  Elk  Hills.  Both 
slopes  are  revealed  in  those  canyons  and  are  very 
well  defined.  The  north  slope  is  best  defined.  I 
found  probably  twelve  or  fifteen  indications  show- 
ing the  north  slope  of  that  anticline.  I  did  not  find 
the  south  slope  in  so  many  points,  but  where  you  find 
the  north  slope  you  can  find  the  south  slope.  I  never 
went  in  there  to  find  the  anticline  particidarly,  but  I 
noticed  it  as  I  was  going  through.  I  am  certain  that 
I  found  stratification  showing  the  south  flank  of  tlie 
anticline.  The  south  anticline  was  Cjuite  plain  in  sec- 
tion 30  of  township  30  south,  range  24  east,  and  you 
can  find  indications  of  that  south  slope  of  the  anti- 
cline in  section  32,  township  30  south,  range  24  east, 
where  I  found  this  blow-out.  You  find  the  forma- 
tion dipping  to  the  south  and  to  the  north.  The 
thickness  of  a  section  of  the  stratification  revealed 
on  the  south  side  was  probably  fifty  feet.  That  line 
of  stratification  dips  to  the  southwest.  The  materials 
shown  in  these  strata  are  sandv  clav  and  fuller's- 


211 

earth.     The  fuller 's-earth  strata  show  very  promi- 
nently."    (R.  328-90 

C.  F.  Haberkern,  engaged  in  the  development  and 
prospecting  of  lands  in  the  Elk  Hills  and  vicinity, 
testified  that  in  August  or  September,  190-1,  he,  with 
Josiah  Owen,  w^ent  all  over  the  Elk  Hills  and  at  that 
time  they  visited  the  oil  seep  in  section  32  of  30-24. 
Owen,  he  said,  made  a  careful  examination  of  the 
lands  and  they  discussed  the  possibility  of  finding 
oil,  fuller 's-earth  and  gypsum.  Owen  said  he 
thought  there  w^as  oil  there,  but  that  it  was  very 
deep  and  would  not  pay  to  go  after  it  then.  From 
three  to  four  thousand  feet.  It  would  not  pay  at 
that  time  because  oil  was  very  low  at  that  time 
(R.  354).  He  testified  that  the  lands  in  30-23 
looked  good  enough  to  him  to  afterwards  locate 
them  and  he  and  his  associates,  in  pursuance  of  the 
examination  made  bv  him  and  Ow^en,  later  located 
the  lands  in  30-23.  They  located  on  the  even-num- 
bered sections  and,  although  he  wanted  to  locate  the 
odd-numbered  sections  also,  they  did  not  do  it,  be- 
cause Owen  told  him  he  was  working  for  the  rail- 
road company  and  not  to  take  any  railroad  land, 
meaning,  of  course,  the  odd-numbered  sections  (R. 
350).  This  witness  was  also  a  stockholder  in  the 
Eight  Oil  Company  When  a  particular  section  was 
pointed  out  b}^  the  witness  to  Owen  the  latter  said: 
''Mr.  Haberkern,  don't  locate  that  land.  It  is  rail- 
road land.  I  am  working  for  the  railroad  company 
myself  and  it  wouldn't  look  good  for  me  to  locate 
the  land";  and  it  was  marked  "S.  P.  R.  R."  on  a 


212 

map  he  had  with  him.  This  was  in  August  or  Sep- 
tember, 1904,  when  Owen  also  said  to  him  that  the 
odd-numbered  sections  in  the  Elk  Hills  were  as 
good  as  the  even;  that  the  railroad  lands  in  that 
township  (30-23)  were  just  as  good  for  mineral  as 
the  even  sections  (R.  355). 

H.  A.  Blodgett  sent  Jewett  &  Blodgett's  oil  ex- 
pert, Youle,  into  the  Elk  Hills  to  make  an  examina- 
tion. Youle  reported  that  the  Elk  Hills  showed  in- 
dications of  being  oil  bearing  and  Blodgett  and  his 
associates  made  locations  there  in  December,  1899, 
which  they  kept  up  for  six  years,  spending  a  good 
deal  of  money  on  them.  He  believed  that  the  indi- 
cations in  the  Elk  Hills  were  good  and  had  never  had 
any  reason  to  change  his  oi3inion  (R.  367).  It  was 
the  intention  of  himself  and  associates  to  prospect 
that  country  and  develop  it  for  oil  (R.  371).  The 
reasons  for  not  developing  the  property  in  the  Elk 
Hills  was  that  there  was  no  market  for  oil,  the  price 
being  so  low  that,  if  he  had  had  a  thousand  barrels 
on  hand  in  the  Elk  Hills,  he  could  not  have  trans- 
ported it  and  it  would  not  have  been  worth  a  cent 
(R.  390).  The  reason  he  did  not  drill  in  the  Elk 
Hills  was  that  oil  had  no  value  (R.  391).  The  only 
development  that  he  did  was  right  alongside  of  the 
railroad  track  which  gave  the  oil  a  little  more  value 
under  the  conditions  then  existing  than  if  it  was  in 
the  Elk  Hills  (R.  392). 

There  was  coasiderable  oil  excitement  in  that 
country  in  1900,  '01  and  '02,  when  a  great  many  com- 
petent oil  men  came  in  and  located  lands  for  oil  (R. 


213 

383-4).  While  this  witness  was  developing  the  ter- 
ritory lying  at  the  foot  of  the  Temblor  Range  near 
the  outcrop  at  the  time  in  question,  he  did  not  con- 
sider that  more  valuable  for  oil  than  the  Elk  Hills 
because  the  latter  were  further  away  from  the  out- 
crop; indeed,  he  said  the  Elk  Hills  were  east  ''and 
in  exactly  the  right  direction";  that  lack  of  trans- 
portation facilities  alone  underlaid  their  failure  to 
drill  in  the  Elk  Hills  (R.  392,  395). 

H.  P.  Dover,  although  having  been  in  the  Elk 
Hills  before,  went  into  the  Elk  Hills  in  the  Spring 
of  1903  or  1904  to  locate  oil  lands  and  did  locate 
several  claims.  He  saw  the  seepage  in  32  of  30-24 
(R.  461).  He  found  shale  in  the  Elk  Hills  which 
formation  he  thought  was  favorable  for  oil  and  had 
no  reason  to  change  his  opinion  at  the  time  of  testi- 
fying. The  chief  value  of  the  Elk  Hills  is  for  oil, 
if  for  anything  (R.  462,  467).  He  located  section 
30  of  30-24  near  the  gas  seepage  or  blow-out.  The 
Elk  Hills,  he  said,  looked  to  be  pretty  good  territory 
to  him  and  looked  promising  to  all  of  them,  speak- 
ing of  his  associates.  They  believed  and  thought 
there  was  oil  there,  the  same  as  in  the  Midway 
where  they  had  drilled,  but  didn't  put  any  money 
into  it  because  oil  was  down  so  cheap  (R.  468). 

C.  F.  Whittier  in  1902  talked  with  personal 
friends  as  to  the  situation  in  the  Elk  Hills  and  in- 
tended to  go  in  there  and  make  some  locations  and 
do  development  work  and  get  a  patent  to  the  land, 
but  was  unfortunately  crippled  so  that  he  could  not 
go  over  there  then  (R.  471-472).    It  was  the  general 


214 

impression  of  the  oil  men  of  his  acquaintance  around 
McKittrick  as  early  as  1904  that  the  Elk  Hills  would 
be  proven  to  be  oil  bearing.  He  regarded  them  as 
good  prospective  oil  territory  and  was  making  ar- 
rangements in  1904  to  get  money  to  locate  some  of 
the  land  and  do  the  assessment  work  which  the  law 
required  at  that  time  and  get  patent;  but  an  in- 
jury to  his  knee  kept  him  confined  to  the  house  sev- 
eral years  and  prevented  him  from  doing  so  (R. 
474).  He  regarded  the  Elk  Hills  as  no  more  of  a 
gamble  than  other  oil  ventures,  though  more  of  a 
gamble  than  it  would  be  at  places  closer  to  the  crop- 
pings.  Assuming  that  there  is  a  cropping  in  32  of 
30-24,  he  stated  that  there  was  no  more  of  a  gamble 
in  drilling  on  lands  within  two  or  three  miles  of  that 

or  in  that  vicinity  than  there  was  on  other  landh 

(R.  477). 

F.  Barrett  first  went  into  the  Elk  Hills  in  1899  in 
the  employ  and  interest  of  a  gentleman  by  the  name 
of  Hilbish  who  paid  him  one  hundred  dollars  a  day 
and  his  expenses  to  go  down  there.  He  rode  over 
the  entire  township  diagonally  finding  oil  indica- 
tions at  two  or  three  places  where  there  liad  been 
seepages.  As  the  result  of  his  investigation  he  made 
in  writing  a  favorable  report  on  the  Elk  Hills  and 
recommended  them  as  good  oil  bearing  territory  and 
had  had  no  reason  since  that  time  to  change  his 
opinion  (R.  479-481). 

N.  C.  Farnum  had  been  many  tunes  in  the  Elk 
Hills  and  three  times  before  patent.  He  went  there 
for  the  purpose  of  making  examinations  and  took 


215 

other  means  of  satisfying  himself  aside  from  his  own 
personal  examinations.  In  1899  he  was  satisfied 
that  there  was  a  fair  chance  of  getting  oil  there.  He 
went  over  30-23  and  was  on  every  one  of  sections 
15,  17,  19,  21,  23,  25,  27,  29,  33  and  35  and  his  opin- 
ion as  to  the  oil  character  of  the  land  included  these 
sections  as  well  as  the  even-nmnbered  sections  (R. 
496-497).  He  was  interested  with  Jewett  &  Blod- 
gett  for  whom  Youle  made  his  investigation  and  re- 
port. That  report  was  very  favorable  and  stated 
that  there  had  undoubtedly  been  oil  in  32  of  30-24 
and  that  the  country  between  there  and  section  14 
of  30-22  had  the  appearance  to  him  of  oil  land  (E. 
497-498).  He  formed  the  opinion  absolutely  that  the 
territory  in  the  Elk  Hills  was  oil  territory,  having 
had  no  reason  to  change  that  opinion  and  still  be- 
lieving it  to  be  oil  territory  (E.  499).  He  knew 
that  his  associates  did  not  regard  the  land  which 
they  located  as  merely  a  prospect.  He  and  they  con- 
sidered it  better  than  a  prospect.  They  spent  a  good 
deal  of  money  there  and  a  man  does  not  usually 
spend  a  great  deal  of  money  on  a  prospect.  They 
were  assured  in  their  own  minds  as  well  as  they 
possibly  could  be  without  drilling  that  it  was  oil 
territorv;  and  he  still  considered  it  as  such.  Know- 
ing  of  the  conditions  then  existing,  they  would  have 
sunk  a  well  for  the  reason  that  they  had  determined 
to  drill  a  hole  in  the  Elk  Hills  no  matter  what  the 
cost  as  far  as  they  could  go  and  as  far  as  money 
would  go.  That  was  their  absolute  determination, 
not  to  be  deviated  from  until  the  government  with- 
drew the  land.     AYhen  the  government  withdrawal 


216 

was  removed  in  1904,  the  conditions  had  changed 
very  materially  from  1901  and  1902,  money  was  hard 
to  get,  the  price  of  oil  was  so  low  it  didn't  pay  to 
produce  it  and  transportation  conditions  were  in- 
adequate (R.  512). 

C.  W.  Lamont  regarded  the  Elk  Hills  country 
prior  to  patent  as  good  oil  territory  and  the  only 
conclusion  to  which  he  had  since  come  was  that  it 
was  better  than  he  thought  it  was  in  the  first  place 
(R.  581). 

W.  H.  Hill  was  a  member  of  the  firm  of  Barlow  & 
Hill  who  in  1904  published  a  map  of  the  California 
oil  fields  at  Kern  River,  Coalinga,  Sunset,  Midway 
and  McKittrick.  He  stated  that  on  his  maps  a  drill- 
ing rig  is  indicated  by  a  circle  with  a  dot  in  the 
center ;  a  derrick  is  indicated  only  by  a  circle ;  where 
oil  was  struck,  the  whole  interior  of  the  circle  is 
black.  If  the  well  was  abandoned,  four  short  marks 
are  made  on  the  opposite  sides  of  the  circle.  The  date 
on  the  maps  is  1904  and  they  are  correct  pictures  of 
the  oil  conditions  in  the  particular  townships  which 
they  purport  to  picture  at  that  time.  He  testified 
that  his  firm  published  2500  copies  and  sold  all  of 
them,  probably  two-thirds  in  and  around  the  oil 
fields  in  Kern  County  and  the  balance  in  Los  An- 
geles and  San  Francisco  excepting  a  few  which 
were  sent  East  by  mail  and  to  the  old  country. 
This  map  was  completed  and  published  before  Au- 
gust 31,  1904  (R.  110). 

C.  A.  Barlow,  the  other  member  of  the  firm  of 
Barlow  &  Hill,  testified  that  the  Southern  Pacific 


217 

Company,  as  well  as  almost  everybody  else,  bought 
these  maps  from  his  firm  and  that  he  presumed  that 
the  Southern  Pacific  Company  began  purchasing 
them  from  the  time  when  he  began  to  publish  them 
(R.  2033-2034).  The  maps  in  question  were  intro- 
duced in  evidence  as  plaintiff's  Exhibits  Ha,  Hb,  He 
and  Hd. 

These  maps,  the  general  sale  and  distribution  of 
which  have  been  shown,  delineate  the  conditions  with 
reference  to  seepages  and  development  along  the 
Temblor  Eange  prior  to  1904.  They  show  a  large 
number  of  seepages  and  wells  and  must  have  sharply 
called  attention  to  the  oil  character  and  oil  possi- 
bilities of  the  lands  in  general  in  the  San  Joaquin 
valley  and  Kern  County  and  particularly  around 
McKittrick. 

The  following  testimony  is  from  witnesses  in  be- 
half of  appellants: 

James  A.  Ogden  testified  that,  while  he  did  not 
make  the  locations  and  was  not  in  the  coountry  when 
they  were  made,  he  had  some  locations  at  one  time 
in  the  Elk  Hills.  He  could  not  say  that  at  that  time 
he  considered  the  Elk  Hills  to  be  oil  land,  as  he  was 
not  an  oil  man  and  thought  very  little  about  it.  He 
had  not  heard  oil  men  discuss  the  Elk  Hills  as  possi- 
ble oil  land,  but  there  were  a  great  many  people 
going  in  and  locating  land  there  (R.  1982-3). 

D.  S.  Ewing  did  not  think  that  there  was  much  gen- 
eral opinion  in  1900-1901  as  to  how  far  into  the  val- 


1M8 

ley  the  oil  went.  The  idea  was  that  from  the  outcrops 
of  the  oil  sands  along  the  easterly  side  of  the  Coast 
Range  mountains  the  stratification  would  dip  at  cer- 
tain angles  toward  the  plains  and  that  the  closer 
you  kept  to  the  outcrops  of  the  oil  sands  on  the  hill- 
side the  more  certainly  vou  would  strike  oil,  but  in 
less  quantities;  and  the  further  you  got  on  the  dip 
and  the  deejDer  down  you  went,  if  you  struck  oil  at 
all,  you  would  get  it  in  better  quantities  (E.  2250). 
He  was  not  a  geologist  and  made  no  examination  of 
the  Elk  Hills.  He  looked  for  outcrops  of  sand  or 
other  indications  of  oil  and  found  nothing  that  at- 
tracted his  attention  or  fancy  to  make  him  think 
there  was  oil  there  (R.  2251). 

Robert  E.  Graham  testified  that  it  was  a  general 
idea  among  oil  men  from  1901  to  1904  that  the  oil 
was  along  the  edge  of  the  hills  and  he  always  figured 
that  there  was  oil  out  in  the  flat,  but  that  it  would 
be  deep;  and  that  he  guessed  that  everj^body,  the 
majority  of  them,  anyhow,  figured  the  same  way  (R. 
2132).  He  didn't  think  the  Elk  Hills  oil  land;  but 
he  didn't  know  (R.  2133). 

E.  W.  Kay  testified  that  in  1901  the  general  im- 
pression among  oil  men  with  whom  he  came  in  con- 
tact was  that  the  oil  territory  was  around  through 
the  valley  from  McKittrick  to  Sunset  along  the  edge 
of  the  main  Range  (R.  2085).  In  1901  he  made  a 
trip  into  the  Elk  Hills  with  two  other  men  hunting 
for  oil  lands,  but  found  no  indications  of  oil  and 
made  no  locations  (R.  2085).     He  was  looking  for 


219 

croppings  of  oil-saiids  and  at  that  time  they  probably 
would  have  been  a  conclusive  indication  to  him  of 
the  oil  character  of  the  land  (R.  2086). 

M.  H.  AVhittier  testified  that  up  to  1905  there  may 
have  been  some  people  who  considered  the  Elk  Hills 
as  oil  lands,  but  that  he  was  not  particularly  inter- 
ested in  them  and  never  had  been;  that  there  was  a 
time  when  people  thought  the  Elk  Hills  oil  territory 
and  that  the  Associated  Oil  Company  wTnt  in  there 
by  the  advice  of  very  good  people,  but  that  he 
thought  they  were  kind  of  sick  of  it  (R.  1985). 

J.  P.  Kerr  came  to  the  conclusion  in  1901  that  the 
Elk  Hills  country  was  too  much  of  a  "wildcat"  for 
him  to  tackle  (R.  2121).  He  thought  the  formation 
stood  up  too  steep  to  reach  far  out  into  the  valley 
that  runs  towards  the  Elk  Hills  and  he  thought  that 
that  opinion  was  entertained  by  every  oil  man  there 
(R.  2125).  He  said,  however,  that,  if  he  had  in  1901 
found  the  stained  sand  formed  by  impregnation  of 
oil  in  32  of  30-24,  it  would  have  been  evidence  to  him 
of  the  existence  of  petroleum  and  he  would  have  con- 
sidered that  pretty  good  "wildcat"  territory.  Even 
if  the  oil  had  been  dried  up  fifty  years,  he  would  have 
considered  it  a  good  chance  to  drill,  because  he  would 
have  expected  to  find  oil  below  the  surface  (R.  2127). 

F.  H.  Hall  testified  that  in  1901  some  thought  that 
the  oil  belt  would  run  out  into  the  flat,  while  others 
contended  that,  if  you  got  down  off  the  hills,  no  oil 
would  be  obtained  at  all.  When  he  first  went  into 
the  Elk  Hills,  he  had  no  fixed  opinion.    He  thought 


220 

there  might  be  a  possibility  of  oil  being  there  (R. 
1826). 

There  were  other  witnesses  for  appellants  who 
testified  in  similar  vein. 

2.     Belief  of  appellants  in  the  oil  character  of  the  lands  in  suit. 

Obviously  the  belief  of  appellants  can  only  appear 
and  be  proven  by  the  belief  of  their  agents  and 
officers. 

John  R.  Scupham's  belief: 

John  R.  Scupham  had  been  a  civil  engineer  in  the 
employ  of  the  Central  Pacific  and  Southern  Pacific 
Railroad  companies.  About  1874  he  was  recalled 
from  field  work  and  was  given  an  office  in  the  engi- 
neering department  and  served  as  consulting  en- 
gineer to  the  directors  of  the  two  railroad  companies 
named,  the  Southern  Pacific  Company,  The  Western 
Development  Company  and  the  Pacific  Improvement 
Company.  He  reported  to  the  directors  of  the  sev- 
eral companies  who  were  Leland  Stanford,  Charles 
Crocker,  Mark  Hopkins,  C.  P.  Huntington  and 
afterwards  D.  D.  Colton,  Judge  F.  B.  Crocker, 
Colonel  C.  F.  Crocker  and  A.  N.  Towne,  the  last 
named  being  general  manager  of  the  Central  and 
Southern  Pacific  railroad  companies.  He  examined 
mineral  lands  in  which  these  companies  or  their 
directors  w^ere  interested  (R.  584-585).  In  1887  he 
was  asked  by  Mr.  Towne  if  he  thought  that  the 
asphalt  deposits  west  of  Bakersfield  would  justify 
the  building  of  a  road  in  there  and  was  directed  to 


221 


inspect  the  deposits  and  report  to  Mr.  Towne.    After 
viewing  the  asphalt  deposits  around  Asphalto,  now 
McKittrick,  he  went  to  the  southwest  into  the  pass 
between  the  hills  and  examined  the  country  lying  to 
the  southwest.    He  went  into  the  Elk  Hills  where  he 
found  seepages,  discovering  the  best  oil  seepage  of 
all  in  section  32  of  30-24.    He  examined  the  land  as 
he  passed  over  it  and  thought  that  it  was  underlaid 
with  oil.     On  his  return  to  San  Francisco  he  de- 
scribed to  General  Manager  Towne  what  he  had  seen 
at  Asphalto  and  then  told  him  that  he  thought  ''those 
hills  lying  to  the  east  were  overlying  the  oil  measures 
and  that  they  would  turn  out  to  be  very  important  in 
their  future  development",  referring  to  what  are 
now   called   the   Elk   Hills.     Mr.    Towne   sent   for 
Colonel  C.  F.  Crocker  and,  when  Mr.  Crocker  came 
in,  said  to  him:  "Scupham  thinks  those  hills  south 
of  Miller  &  Lux'  ranch  are  overlying  an  oil  deposit" 
or  words  to  that  effect.    Mr.  Crocker  replied :  "Well, 
it  is  a  good  thing  that  there  is  some  value  of  that 
kind  in  that  land,  otherwise  it  would  be  a  very  poor 
asset    for    the    company."      Colonel    Crocker,    Mr. 
Towne  and  Scupham  sat  down  together  and  Scupham 
at  the  request  of  Colonel  Crocker  went  into  details 
and  explained  thoroughly  the  reasons  for  his  opinion. 
He  thought  at  the  time  that  the  Elk  Hills  were 
valuable  lands  and  much  more  important  than  the 
lands  lying  to  the  west  and  north,   so   stating  to 
Towne  and  Crocker  (R.  587-8). 

His  impression  was  that  in  this  conversation  he 
informed  Mr.  Towne  and  Colonel  Crocker  that  the 


222 

Elk  Hills  were  better  oil  lands  than  those  around 
McKittrick  because  the  formation  sloped  from  Mc- 
Kittrick  towards  them,  while  to  the  northwest  and 
west  it  was  faulted  and  badh^  fractured  and  not 
so  likely  to  be  productive  of  oil  as  where  the  forma- 
tion w^as  more  uniform  in  its  slope  as  in  the  Elk 
Hills  (R.  596).  Of  course,  he  did  not  know  mathe- 
matically that  the  oil  was  there  in  paying  quantities, 
but  he  thought  from  the  manifestations  which  he 
observed  on  the  surface  that  such  was  the  case.  The 
seepage  in  32  of  30-24  indicated  most  positively  that 
there  was  oil  in  its  vicinity.  It  was  a  fresh  seepage 
and  not  in  an  exhausted  oil  sand.  It  showed  fresh- 
ness of  the  outflow  of  oil,  the  stain  being  a  fresh 
stain,  and,  while  he  could  not  detect  actual  oil,  the 
stain  was  necessarily  recent  and  there  had  not  been 
complete  evaporation  of  the  oil — a  condition  which 
he  did  not  think  could  obtain  in  a  bed  of  oil  sand 
that  was  not  productive  (R.  597). 

J.  B.  Treadwell's  belief: 

J.  B.  Treadwell  was  first  sworn  in  this  case  as  a 
witness  in  behalf  of  the  government  and  testified 
that  from  the  Spring  of  1893  until  the  Summer  of 
1903  he  was  employed  by  the  Southern  Pacific  Com- 
pany in  developing  and  producing  oil  for  them.  He 
knew  Collis  P.  Huntington,  H.  E.  Huntington  and 
Julius  Kruttschnitt  and  acted  under  their  orders; 
subsequently  under  Mr.  Hayes  and  E.  H.  Harriman. 
He  was  succeeded  by  Professor  E.  T.  Himible  (R. 
424).  Subsequently  Mr.  Treadwell  was  called  as  a 
witness  for  appellants  (R.  3413). 


223 

When  on  tlie  stand  as  a  witness  for  tlie  govern- 
ment Treadwell  testified  that  at  different  times  he 
caused  lands  of  the  Southern  Pacific  Railroad  Com- 
pany to  be  withdrawn  from  sale  by  the  land  depart- 
ment of  that  company,  explaining  that  he  did  this 
for  the  reason  that  Jerome  Madden,  the  land  agent 
of  the  company  at  that  time,  had  through  ignorance 
sold  valuable  oil  lands  as  agricultural  lands  and  at 
agricultural  prices.    On  cross-examination  he  stated 
that  he  knew^  the  Elk  Hills  and  that  none  of  his  with- 
drawal orders  took  in  any  portion  of  them,  saying 
that  he  had  been  over  in  the  EUv  Hills  in  connection 
with  some  location  notices  in  which  he  was  interested 
and,  after  seeing  the  land,  did  not  consider  it  at  that 
time  oil  land  of  any  value.    Accordingly,  he  did  not 
ask  to  have  any  of  the  lands  there  withheld  from 
sale  (R.  435). 

On  re-direct  examination,  while  repeating  that  he 
had  at  no  time  recommended  the  withdrawal  from 
market  of  lands  in  the  Elk  Hills,  he  admitted  that 
he  may  have  included  section  31  of  30-23  in  a  with- 
drawal.   He  said  he  did  not  consider  that  in  the  Elk 
Hills  (R.  439).    During  the  interval  of  months  be- 
tw^een  the  time  w^hen  Treadwell  was  on  the  stand  as 
a  witness  for  the  government  and  his  resumption  of 
the  stand  as  a  witness  for  appellants,  Exhibit  115 
had  been  produced  in  evidence  showing  the  with- 
drawals made  by  him  and  bearing  the  legend   "All 
shaded  tracts  reserved  from  sale  because  in  or  near 
oil  territory."    When  confronted  with  this  Tread- 
well admitted  that  the  shaded  tracts  included  the 


22-1: 

following  sections  in  township  30-23:  3,  5,  7,  9,  13, 
14,  17,  31  and  the  NW14  of  19,  the  very  township  in 
which  lie  the  lands  in  suit;  also  in  township  30-24 
sections  1,  7,  19,  21,  23,  24,  26,  35;  also  several  sec- 
tions in  31-24  (R.  3423). 

Treadwell  admitted  that  at  least  eight  sections  in 
the  Elk  Hills  in  30-24  were  reserved  from  sale  be- 
cause in  or  near  oil  territory  and  that  all  of  township 
30-23  in  the  Elk  Hills  was  included  and  reserved 
from  sale  except  those  sections  which  appeared  to  be 
unsurveyed  (E.  3424;  see  also  3458). 

Thus  it  appears  that,  while  Treadwell  as  a  witness 
for  the  government  denied  his  belief  in  the  oil 
character  of  the  Elk  Hills,  his  action  in  withdrawing 
lands  therein  from  sale  prior  to  patent  proves  that 
he  thought  them  oil  lands;  for,  if  he  did  not  think 
them  oil  lands,  why  would  he  have  withdrawn  them 
from  sale  1 

The  record  show^s  that  Treadwell  himself  prior  to 
patent  made  mineral  locations  in  the  Elk  Hills,  tv\^o 
miles  from  the  lands  in  suit.  Section  33  of  30-24 
was  located  December  13,  1899,  by  J.  B.  Treadwell, 
May  Treadwell,  E.  D.  Treadwell,  C.  C.  Boynton,  F. 
Bovnton,  W.  L.  Hardison,  Guv  Hardison  and  R.  S. 
Ashton,  all  of  the  seven  last  named  except  R.  S.  Ash- 
ton  being  related  to  him  (R.  3426-7).  He  stated  that 
at  that  time  he  evidently  believed  that  it  was  mineral 
land  (R.  3427).  At  the  same  time  he  made  several 
other  locations  in  the  Elk  Hills  (R.  3427-8-9).  This 
section  33  of  30-24  was  patented  to  the  Southern  Pa- 


225 

cific  Railroad  Company  in  May,  1902,  under  patent 
numbered  111,  Exhibit  "6-A"  (R.  3452-3-4-5-6). 
Tlius,  in  1899  Treadwell,  oil  expert  and  geologist  of 
the  Southern  Pacific  Company,  located  for  petroleum 
purposes  the  very  section  of  land  which  his  employer, 
the  railroad  company,  secured  in  1902  under  an 
agricultural  patent. 

It  is  true  that  Treadwell  testified  that,  after  ex- 
amination of  the  lands  in  the  Elk  Hills  covered  by 
his  location,  he  came  to  the  conclusion  that  they 
possessed  no  value  for  oil;  but  this  self-serving 
declaration  does  not  comport  with  the  testimony  of 
other  disinterested  witnesses  nor  with  his  own  acts 
in  reserving  these  lands  for  oil  purposes. 

John  Jean  testified  that  he  reported  to  Treadwell 
his  discovery  of  the  seepage  in  32  of  30-24  and  accom- 
panied Treadwell  and  L.  G.  Sarnow  to  inspect  it  in 
1899.  Treadwell  and  Sarnow  examined  the  oil  sands 
and  Treadwell  said  they  looked  good.  On  the 
strength  of  that  discovery  Treadwell,  Sarnow,  Jean 
and  others  made  locations  of  the  lands  about  there. 
L.  G.  Sarnow  testified  that,  upon  inspection  of  the 
seepage  in  question,  he  thought  the  land  good  for  oil 
and  that  Treadwell^  who  was  a  mineralogist  and 
with  him  at  the  time,  thought  it  was  good  for  oil,  but 
that  both  of  them  thought  it  was  deep.  He  corrobor- 
ated Jean  that  on  the  strength  of  that  showing 
Treadwell  and  Jean  and  he  located  the  land  (R. 
135-136). 

Treadwell  testified  that,  if  he  said  anything  to 


226 

Sarnow  about  the  possibilities  of  oil  in  the  Elk  Hills, 
he  said  it  was  not  good  (E.  442),  thus  bringing  him- 
self into  sharp  conflict  with  Sarnow. 

It  would  be  difficult  to  conclude  that  an  experi- 
enced oil  man,  who  in  1899  and  1900  was  withdraw- 
ing from  sale  and  reserving  for  oil  purposes  for  his 
employer  lands  immediately  in  the  Elk  Hills  and 
wdio  himself  was  seeking  by  mineral  locations  to 
acquire  lands  there,  did  not  believe  in  their  oil 
character.  His  words  as  a  witness  do  not  comport 
with  his  acts  either  as  an  individual  or  as  an  officer 
and  servant  of  appellants.  Actions  speak  louder 
than  words  and  the  government  appeals  from  his 
words  as  a  witness  to  his  acts  as  a  geologist  of  appel- 
lants and  as  an  individual  bent  on  private  gain — to 
his  withdrawals  and  to  his  locations. 

E.  T.  Bumble's  belief: 

Professor  Dumble  became  consulting  geologist  of 
the  Southern  Pacific  Company  in  1897,  first  becom- 
ing acquainted  with  the  California  fields  in  1901. 
Formerly  he  had  been  located  in  Texas.  From  1901 
he  acted  in  an  advisory  capacity  to  the  manager  of 
the  Southern  Pacific  Company  (R.  2896-7-8-9)  and 
was  in  charge  of  all  matters  pertaining  to  oil — he 
chose  Josiah  Owen  in  August,  1902,  to  take  charge 
of  appellants'  oil  territory  in  California  (Rd.  2900)  ; 
Treadwell,  the  oil  expert  of  appellants,  left  Cali- 
fornia in  1903  and  Dumble  put  Owen  in  his  place 
(R.  2907)  ;  in  March,  1903,  he  employed  Frank  M. 
Anderson  as  a  geologist  for  the  Southern  Pacific 


227 

Company  (E.  2909)  ;  when  the  Kern  Trading  &  Oil 
Company  was  organized,  he  was  put  in  charge  (R. 
2911)  and  determined  what  Southern  Pacific  Rail- 
road Company  lands  were  to  be  transferred  to  it  to 
be  developed  for  oil  (R.  2911).  In  his  own  language, 
March  18,  1903,  he  opened  an  office  in  San  Francisco 
and  "took  active  charge  of  the  oil  operations  of  the 
Southern  Pacific  Company"  (R.  2907).  When  he 
testified  in  the  case  in  1912  he  was  still  in  the  employ 
of  and  bore  this  responsible  relation  to  appellants 
(R.  2896,  2979)  and  drew  a  salary  of  ten  thousand 
dollars  per  annum  (R.  2951). 

Professor  Dumble  repeated  many  times  the  state- 
ment that  he  had  never  been  in  the  Elk  Hills  (R. 
2959-3079). 

After  the  Kern  Trading  &  Oil  Company  was 
organized,  Mr.  Kruttschnitt  placed  in  his  hands  the 
examination  of  all  of  the  Southern  Pacific  Railroad 
Company's  oil  lands  that  were  to  be  turned  over  to  it. 
His  testimony  at  this  point  is  as  follows: 

"I  determined  that  the  lands  ivhich  we  he- 
lieved  to  he  oil  lands,  owned  bv  the  Southern  Pa- 
cific  Comjjany,  and  also  lands  or  oil  lands  which 
had  been  bought  by  Mr.  Treadwell  for  the 
Southern  Pacific  Company,  should  be  turned 
over  to  the  Kern  Trading  &  Oil  Company.  That 
included  other  lands  than  those  which  were 
actually  developed  by  wells.  The  company 
owned  everything  that  we  thought  at  that  time 
would  he  eapahle  of  producing  oil  commercially ; 
I  don't  mean  capable  of  producing  oil  com- 
mercially at  that  time.  Most  of  the  lands  was 
quite  a  way  from  any  jDroducing  wells,  and  it 


228 

was  taken  up  with  the  idea  of  furnishing  the 
Company  with  oil  for  a  long  period." 

Special  attention  is  invited  to  the  test  as  defined 
b}^  Professor  Dumble  to  be  applied  to  the  lands  to 
be  transferred:  "lands  which  we  believed  to  be  oil 
lands". 

Again,  in  his  letter  of  September  21,  1903,  to  ]Mr. 
Kruttschnitt  he  recommended  that  the  Kern  Trading 
&  Oil  Company  "should  acquire  by  purchase  or  lease 
such  lands  now  belonging  to  the  Southern  Pacific 
Company  as  ice  consider  valuable  for  oil  purposes" 
(R.  2913).  In  another  place  he  testified :  "Mr.  Owen 
and  I  decided  on  a  list  of  lands  that  were  to  be  trans- 
ferred to  the  Kern  Trading  &  Oil  Company"  (R. 
2925).  TSHien  he  referred  to  the  Southern  Pacifi-C 
lands  he  meant  the  Southern  Pacific  Railroad  Com- 
pany's lands  (R.  2912). 

Exhibit  118  was  a  letter  written  by  Dmnble  to 
Owen  for  the  purpose  of  getting  the  latter 's  ideas  as 
to  what  lands  should  be  included  in  the  lease  (R. 
2910).  Owen  replied  by  maps  (R.  2910)  and  Dumble 
included  in  the  lease  every  parcel  of  land  recom- 
mended by  Owen. 

Xow,  the  lands  transferred  to  the  Kern  Trading 
&  Oil  Company  included  section  31  of  the  very  town- 
ship in  which  the  lands  in  suit  lie  and  cornering  with 
one  of  the  sections  in  suit  (R.  3061-5),  Dumble  testi- 
fying that  he  included  it  because  Owen  had  put  it 
on  his  map  "as  possible  oil  territory  because  of  an 
anticline  that  ran  tlu'ough  it"  (R.  2953). 


229 

It  is  hardly  conceivable  that  in  1903  Dumble  and 
Owen  could  have  considered  section  31  oil  land  with- 
out   so    considering    other   land    contiguous    to    it. 
Dumble  says  that  Owen  considered  section  31  "possi- 
ble oil  land  because  of  an  anticline  that  ran  through 
it,"  as  just  noted.     This  leads  to  tw^o  observations: 
First,  that  Owen  does  not  appear  to  have  limited  it 
to  "possible  oil  land",  Dmnble  himself  having  stated 
that  the  test  was  "what  we  consider  valuable  for  oil 
purposes"  and  it  plainly  appearing  that  the  Kern 
Trading  &  Oil  Company  was  not  organized  for  the 
purpose  of  dealing  in  oil  lands,  but  exclusively  to 
develop  oil  for  fuel  purposes— it  further  being  shown 
that  in  his  report  to  Mr.  Kruttschnitt  of  the  lands  to 
be  included  in  the  lease  Dumble  hunself  states  that 
the   unprospected   lands   are   "simply   probable    oil 
lands    which,  from    our  investigations,    we    believe 
will  prove  valuable''  (E.  2927).     Second,  that  the 
presence  of  the  anticline  was,  according  to  Dumble, 
the  reason  for  the  inclusion — of  course,  he  naturally 
had  in  mind  also  the  relation  of  the  section  to  the 
proven  oil  territory.     In  view^  of  the  fact  that  an 
anticline  runs  through  the  lands  in  suit  and  was 
plainly  delineated  on  Owen's  map.  Exhibit  157,  and 
that  the  lands  in  suit  have  exactlv  the  same  relation 
to  the  proven  oil  territory  as  section  31,  the  conclu- 
sion is  irresistible,  his  words  and  statement  as  an 
interested  witness  to  the  contrary  notwithstanding, 
that  Professor  Dumble  must  have  believed  the  lands 
in  suit  oil  lands.    He  says  that  he  put  section  31  in 
"because   Owen  put  it  on  his  map" — he  followed 
Owen's  opinion,  agreeing  with  hun  necessarily  as  to 


230 

the  significance  of  the  presence  of  the  anticline  taken 
in  connection  with  the  surrounding  conditions.  It 
will  hereafter  be  conclusively  shown  that  Owen  re- 
garded the  lands  in  suit  as  oil  lands  and  it  is  fair  to 
assume  that  Dumble,  having  never  been  in  the  Elk 
Hills,  as  he  says,  but  following  Owen  in  all  other 
known  instances,  must  have  shared  the  opinion  of 
Owen,  who  was  often  in  them,  of  the  oil  character 
of  the  Elk  Hills.  Owen  at  that  time  was  working 
under  Humble  and  "had  charge  of  the  oil  fields"  (R. 
2907).  Humble  had  a  very  high  opinion  of  Owen, 
saying  that  he  w^as  "a  very  remarkable  man"  and 
"had  a  faculty  of  carrying  underground  conditions 
in  his  mind  more  perfectl}^"  than  any  man  whom  he 
had  ever  known  (E.  3037).  Then,  too,  Humble,  in 
his  letter  of  February  2,  1904,  to  W.  F.  Herrin,  chief 
counsel,  concerning  the  lands  to  be  leased  to  the 
Kern  Trading  &  Oil  Company,  writes  that  "none  of 
the  lands  in  the  McKittrick  .  .  .  districts  .  .  . 
.  .  .  have  been  actually  proven  by  wells  and, 
while  we  believe  that  there  is  a  strong  prohability 
that  all  of  the  lands  here  mentioned  will  produce  oil, 
it  will  require  drilling  to  make  this  certain"  (R. 
2930).  Two  observations  become  pertinent:  one  is 
that  "we"  evidently  referred  to  Humble  and  Owen; 
the  other  is  that  Humble  and  Owen  believed — and  it 
is  belief  that  is  the  subject  under  discussion — that 
section  31  of  30-23  would  produce  oil. 

Humble  made  several  trips  through  the  oil  lands 
about  McKittrick  and  elsewhere  with  Owen  (R. 
2919).     September  21,  1903,  he  wrote  Mr.  Krutt- 


231 

schnitt  a  letter  in  which  he  divided  the  lands  into 
three  classes,  the  third,  as  he  wrote,  depending  ''in 
part  upon  the  continuance  of  normal  dips  and  condi- 
tions, but  in  addition  it  represents  untested  anti- 
clinals  which  show  good  indications  of  oil"  (R. 
2913).  Undoubtedly,  the  Elk  Hills  anticline,  so  con- 
spicuously traced  on  Exhibit  157,  Owen's  map,  was 
one  of  those  in  Bumble's  mind,  although  he  as  a 
witness  asserts  the  contrary  (R.  3075),  saying  that 
the  letter  in  question  showed  which  anticlines  he  in- 
tended to  include.  But  the  letter  includes  section 
31  of  30-23  which  is  in  the  Elk  Hills. 

Professor  Humble  testified  that,  if  he  had  known 
in  1902  of  an  actual  oil  seep  in  32  of  30-24,  that  fact, 
taken  in  connection  with  the  anticlinal  structure 
found  by  Owen,  would  have  caused  him  to  regard 
"the  lands  in  that  vicinitv  in  the  Elk  Hills  as  favor- 
able  to  expect  the  occurrence  of  oil  there"  (R.  3039). 
It  is  inconceivable  that  Owen  did  not  communicate 
this  knowledge  to  him.  It  will  be  convincingly 
shown  hereafter  that  Owen  knew  of  and  believed  in 
this  seepage. 

Admitting  that  the  lands  in  suit  were  surrounded 
on  all  sides  by  "shaded"  or  withdrawn  oil  lands  (R. 
3040)  and  that  the  reservations  from  sale  of  lands 
because  in  or  near  oil  territory  extended  six  miles 
farther  from  the  outcrop  than  the  lands  in  suit, 
Humble  stated  that,  when  he  took  charge  of  the 
geological  affairs  of  the  Southern  Pacific  Company 
in  California  in  reference  to  oil  lands,  he  did  not 


232 

disturb  the  polic}^  established  before  he  took  charge, 
of  holding  in  reservation  from  sale  because  in  or 
near  oil  territory  all  of  the  lands  in  30-23  and  30-24 
owned  by  the  Southern  Pacific  Railroad  Compan}"; 
and  he  further  stated  that,  if  the  lands  in  suit  had 
been  patented  and  included  in  a  reservation,  he 
would  not  have  disturbed  the  reservation  (R.  3003- 
4-5). 

George  A.  Stone,  of  whom  more  will  be  related 
hereafter,  was  in  1903  and  1904  assistant  to  Eberlein, 
the  acting  land  agent,  who  filed  selection  list  89  and 
made  affidavit  of  the  non-mineral  character  of  the 
lands  in  suit,  and  took  part  in  the  preparation  of 
that  list  under  the  direction  of  Eberlein.  At  the 
time  of  testifying  he  was  a  pensioner  of  the  Southern 
Pacific  Company  (R.  1028).  As  a  witness  for  the 
government  he  made  the  following  statement : 

"I  regarded  the  selection  of  these  lands  as 
irregular.  Mr.  Dumble,  as  the  geologist,  I 
thought  pressed  the  selection  for  reasons  best 
known  to  himself.  I  supposed,  as  geologist,  he 
thought  they  were  oil  lands.  He  pressed  the 
selection  of  this  land  probabh^  within  thirty 
days  prior  to  the  list  in  1903,  not  earlier  than 
September  or  later  than  November."    (R.  1030.) 

Dumble  denied  this ;  but  he  was  a  deeply  interested 
witness,  being  in  the  employ  of  appellants  and  him- 
self and  his  acts  under  fire.  No  possible  reason  can 
be  assigned  for  a  false  statement  at  this  point  by 
Stone;  for  he  was  a  pensioner  of  the  Southern  Pa- 
cific Compan,y  and  stood  to  gain  nothing  by  swearing 
contrary  to  its  interests,  but  was  in  danger  of  losing 
his  pension. 


233 

What  possible  motive  could  have  induced  Dumble 
to  press  the  selection  of  these  lands  except  belief  in 
their  oil  character?  He  had  charge  of  the  oil  affairs 
of  the  Southern  Pacific  ComiDany  and  was  concerned 
only  with  oil  lands  and  the  production  of  oil. 

C.  W.  Eberlein,  the  acting  land  agent  who  made 
the  selection  of  the  lands  in  suit  and  the  affidavits  of 
their  non-mineral  character,  testified  that  in  1901  he 
protested  against  the  practice  of  Professor  Dumble 
and  Dumble 's  men  of  examining  lands  not  yet  pat- 
ented to  the  railroad  company.  He  made  protest  to 
Judge  Cornish,  his  chief  in  Xew  York,  Vice-Presi- 
dent of  the  Southern  Pacific  Company,  and  to  C.  H. 
Markham,  General  Manager  of  the  Southern  Pacific 
Company,  taking  the  position  that  examinations  so 
made  would  charge  the  company  with  notice  of  the 
mineral  character  of  the  examined  lands  (R.  1091- 
2-3).  These  protests  began  in  1901  and  continued 
into  1908.  On  February  22,  1908,  Eberlein  wrote  a 
letter  to  Henry  Conlin,  his  assistant  and  subsequent 
successor  as  acting  land  agent,  which  is  set  out  on 
pages  1091  and  1095  of  the  record.  This  letter  was 
written  in  New  York  where  Eberlein  w^as  at  the 
time  and  because  of  its  importance  is  here  set  out 
in  full: 

Februarv  22,  1908 


If 

"Mr.  Conlin: 

"The  New  York  Office  has  forbidden  the  giv- 
ing out  of  any  more  printed  lists  of  lands  be- 
cause of  the  unsatisfactorv  condition  of  our 
titles  which  must  not  be  disclosed.  The  exami- 
nation of  our  S.  P.  lands  not  yet  patented  by  our 
oil  experts  must  be  stopped  as  inf  onxiation  that 


234 

tliey  may  obtain  or  give  as  to  mineral  character 
prior  to  patent  will  forever  prevent  our  getting 
titles.  Should  Mr.  Calvin  call  for  any  lists 
please  take  this  memo,  to  him  and  explain  our 
situation  and  refer  him  direct  to  the  New  York 
of&ce.  Please  advise  him  too  of  the  pressing 
necessity  of  the  return  of  lists  sent  in  a  year  ago 
for  entry  of  lands  to  be  reserved  for  company 
purposes.  Mr.  Dumble  and  his  men  should  not 
be  furnished  by  us  with  any  data  whatever  ex- 
cept as  to  patented  lands.  For  reasons  above 
given  such  information  will  be  embarrassing 
to  them  and  us  and  may  make  them  witnesses 
against  this  company  in  mineral  contests  here- 
after. 

(Signed)     ''Charles  W.  Eberleix, 

"Acting  Land  Agent." 
(R.  1094-5.) 

The  statement  in  this  letter  was  but  a  continuation 
of  the  accustomed  protesting  which  Eberlein  started 
at  the  time  when  the  Kern  Trading  and  Oil  Com- 
pany lease  was  presented  to  him  for  signature  (R. 
1098). 

This  matter  is  referred  to  because  of  its  bearing 
upon  the  activity  of  Dumble  and  his  assistants  and 
is  significant  as  showing  that  in  advance  of  patent 
they  were  examining  government  lands  for  the  pur- 
pose of  ascertaining  their  mineral  character.  It 
serves  not  only  to  show  Eberlein 's  state  of  mind,  but 
to  throw  light  upon  the  purposes  for  which  Dumble 
was  employed  by  the  Southern  Pacific  Company. 

While  Dumble  testified  that  he  had  nothing  to  do 
with  and  no  interest  in  the  selection  of  the  lands  in 


235 

suit  (R.  3014),  nevertheless  on  December  7,  1904,  five 
days  before  the  date  of  tlie  patent,  he  wrote  a  letter 
to  W.  H.  Bancroft,  Acting  General  Manager  of  the 
Southern  Pacific  Company,  in  which  he  stated  that 
he  had  had  a  conversation  with  Eberlein  and  that  "it 
seems  for  reasons  of  policy  regarding  certain  un- 
patented lands  that  it  will  be  best  not  to  execute  the 
lease  of  lands  between  the  Southern  Pacific  Eailroad 
Company  and  the  Kern  Trading  and  Oil  Company  at 
present",  suggesting  that  the  lease  of  lands  in  the 
McKittrick  district  be  held  up  for  the  present  (E. 
1072-3).  In  March.  1907,  a  controversy  having  arisen 
between  Dumble  and  Eberlein,  the  former  wrote  the 
latter  a  letter  in  which  he  undertook  to  refresh 
Eberlein 's  memory  concerning  events  connected  with 
the  attempted  Kern  Trading  &  Oil  Company  lease 
of  1904  (R.  2855-6-7-8).  The  pertinent  part  of  the 
letter  in  question  follows : 

"Early  in  December  we  had  a  further  con- 
ference on  the  matter  and  you  explained  that 
you  were  rushing  certain  lands  for  final  patent 
and  that  the  immediate  execution  of  the  lease 
showing  our  idea  of  what  were  oil  lands  might 
interfere  with  you  and  we  agreed  to  defer  the 
execution  until  that  danger  was  passed. ' ' 

From  the  foregoing  it  clearly  appears  that  in  De- 
cember, 1904,  Dumble  shared  in  the  apprehension  of 
Eberlein  that  the  Kern  Trading  &  Oil  Company 
lease,  conveying,  as  it  did,  to  an  oil  development  com- 
pany railroad  lands  adjoining  the  lands  in  the  list 
of  lands  to  which  Eberlein  was  endeavoring  to  secure 
patent,  would  endanger  the   success   of  the  effort. 


236 

Accordingly,  Diimble  says,  "we  agreed  to  defer  the 
execution  until  that  danger  was  passed".  In  his 
testimony  Dunible  seeks  to  belittle  the  significance  of 
the  danger  in  question ;  but  the  letter  is  evidence  that 
he  regarded  the  danger  as  real  and  it  is  apparent  that 
the  only  danger  which  he  and  Eberlein  apprehended 
was  the  failure  to  secure  patent  to  the  lands  in  suit 
because  of  action  on  the  part  of  Dumble  and  others 
which  betokened  their  belief  in  the  oil  character  of 
lands  in  the  immediate  vicinity  of  the  lands  in  suit 
and  consequently  of  the  lands  in  suit  themselves. 
Reservations  from  sale,  as  has  been  shown,  were 
made  of  lands  "because  in  or  near  oil  territory", 
showing  that  appellants'  geologist  predicated  the  oil 
character  of  unproven  lands  upon  the  proximity 
thereof  to  proven  lands.  If  Dumble  did  not  share  in 
Eberlein 's  belief  in  the  danger  presented  by  the 
Kern  Trading  &  Oil  Company's  proposed  lease,  why 
should  he  have  recommended  to  the  General  Manager 
that  the  execution  of  the  lease  be  deferred?  He 
could  possibly  have  meant  nothing  other  than  that 
their  execution  should  be  deferred  until  the  patent 
was  secured,  the  idea  being  that  the  issuance  of  the 
patent  w^ould  mark  the  passing  of  the  danger.  If 
Dumble  did  not  believe  in  the  oil  character  of  the 
lands  in  selection  list  89  and  now  in  suit,  he  could  not 
have  sympathized  with  Eberlein 's  fear. 

Dumble 's  testimony  is  contradictory  of  his  acts 
and  brings  him  into  open  conflict  with  the  witnesses 
who,  unlike  him,  were  under  no  inducement  to  speak 
other  than  the  exact  truth.     AYhy  should  Eberlein 


237 

have  given  false  testimony  in  behalf  of  the  govern- 
ment? Why  should  Stone  have  perjured  himself  in 
opposition  to  the  interests  of  the  company  which 
paid  his  pension?  Professor  Bumble's  credibility 
may  be  tested  both  by  the  agreement  or  disagreement 
of  his  testimonv  with  that  of  other  witnesses  and  by 
the  light  which  his  own  evidence  concerning  himself 
and  his  acts  throws  upon  the  transactions  in  which 
he  w^as  concerned. 

Dumble  admitted  the  ownership  of  2667  shares  of 
the  capital  stock  of  the  Eight  Oil  Company  which 
owned  or  claimed  to  own  sections  20,  22,  24,  26,  28, 
30,  32  and  34  of  township  30-23,  the  township  in 
which  the  lands  in  suit  lie.  These  sections  are  imme- 
diately interspersed  with  the  sections  in  suit  and 
adjoin  them.  That  company  also  owned  or  claimed 
to  own  sections  26,  30,  32  and  24  of  township  30-24, 
all  in  the  Elk  Hills ;  as  also  sections  4  and  8  of  town- 
ship 31-23.  It  is  true  that  Dumble  did  not  acquire 
his  stock  in  the  Eight  Oil  Company  until  1909  and 
that  he  stated  that  he  never  heard  of  the  Eight  Oil 
Company  claiming  any  lands  in  30-23.  His  testi- 
mony concerning  his  connection  with  the  Eight  Oil 
Company  is  set  out  on  pages  3044  et  seq.  and  is  inter- 
esting reading.  He  states  that  Josiah  Owen,  a  geolo- 
gist under  him,  induced  him  to  put  money  in  the 
Eight  Oil  Company  and  that  he  absolutely  had 
nothing  to  do  with  the  taking  up  of  the  sections  in 
the  Elk  Hills.  Such  ignorance  on  the  part  of  so 
eminent  a  geologist  and  one  versed  in  oil  affairs  in 
the  region  of  McKittrick  is  somewhat  astonishing. 


238 

It  would  seem  that  one  who  held  so  large  a  number 
of  shares  in  a  company  whose  success  was  dependent 
upon  the  sound  advice  of  oil  geologists  and  who  had 
received  one  dividend  of  twenty  thousand  dollars 
(R.  3049)  would  have  taken  the  pains  to  acquaint 
himself  more  intimately  with  its  transactions  and 
business  than  Professor  Dumble's  testimony  would 
lead  one  to  believe  that  he  took.  It  is  hardly  to  be 
believed  that  the  Eight  Oil  Company,  of  which  Pro- 
fessor Dumble  was  one  of  the  largest  stockholders, 
would  have  sought  to  acquire  several  thousand  acres 
of  land  in  the  Elk  Hills  without  submittting  the  mat- 
ter to  him  and  it  is  a  fair  inference  that  what  was 
done  was  done  with  his  knowledge  and  upon  his 
advice  and,  if  this  be  true,  it  follows  that  in  1908  at 
least  the  consulting  geologist  of  the  Southern  Pacific 
Company  believed  in  the  oil  character  of  the  lands 
interspersed  with  and  adjoining  the  lands  here  in 
suit. 

Professor  Dumble  owned  one-tenth  of  the  capital 
stock  of  the  Buena  Vista  Land  and  Development 
Company,  that  company  claiming  to  own  a  great 
deal  of  land  in  the  Buena  Vista  Hills  and  vicinity 
that  was  taken  up  under  agricultural  scrip,  having 
bought  from  S.  P.  Wible  scrip  title  to  five  or  six 
sections.  When  examined  about  these  matters  Pro- 
fessor Dumble  admitted  that  the  Buena  Vista  Land 
and  Development  Company  was  seeking  to  secure 
patents  to  lands  in  the  vicinity  of  the  Buena  Vista 
Hills  as  agricultural  lands  the  while  he  knew  that 
they  were  mineral  or  oil  lands.    Asked  if  he  did  not 


239 

think  that  it  was  his  dut}^  as  a  stockholder  in  the 
Buena  Vista  Land  and  Development  Company,  be- 
lieving as  he  did  that  these  lands  were  petrol emn 
lands,  to  disclose  his  belief  to  the  United  States  Land 
Office  where  the  contest  Avas  pending,  he  replied:  "I 
don't  consider  that  I  have  anv  dutv  whatever  in  the 
premises"  (E.  3055-6-7-8-9). 

It  is  submitted  that  the  point  of  view  of  Professor 
Bumble  as  shown  by  his  attitude  towards  the  effort 
of  the  Buena  Vista  Land  and  Development  Company 
to  secure  agricultural  patents  to  lands  known  by  him 
to  be  mineral  is  marked  by  mental  obliquity  and  that 
it  furnishes  a  sound  test  by  which  to  determine  the 
credibility  of  his  testimony  in  this  case.  The  govern- 
ment insists  that  the  evidence,  fairly  considered, 
proves  that  he  in  1904  entertained  the  belief  that  the 
Elk  Hills,  including  the  lands  in  suit,  were  oil  lands. 

Josiah  Owen's  belief: 

Josiah  Owen,  according  to  the  testimony  of  his 
son,  Erwin  W.  Owen,  was  a  geologist  and  mineralo- 
gist and  from  1902  until  the  time  of  his  death,  De- 
cember 19,  1909,  was  employed  by  the  Southern 
Pacific  Company  or  the  Southern  Pacific  Railroad 
Company  or  by  both  and  by  the  Kern  Trading  & 
Oil  Company  as  a  geologist.  He  had  been  in  the 
employ  of  the  Southern  Pacific  Company  in  1898  or 
1899  in  Mexico,  having  prosecuted  his  work  as  a 
geologist  for  35  years  before  that  time  and  having 
gotten  "his  training  in  the  hills  together  with  what 
reading  he  could  do".     He  reported  to  Professor 


240 

Durable,  who  was  consulting  geologist  of  the  South- 
ern Pacific  Company  or  the  Southern  Pacific  Rail- 
road. Compam^  The  witness,  Erwin  W.  Owen,  was 
the  administrator  of  Josiah  Owen's  estate  and  in  that 
capacity  took  and  had  possession  of  certain  papers 
and  letters  belonging  to  his  father,  some  of  which 
were  introduced  in  evidence. 

It  is  now  proposed  to  show  the  belief  of  Professor 
Owen  in  the  oil  character  of  the  Elk  Hills  by  refer- 
ence to  his  maps,  letters,  declarations  and  his  own 
locations  or  those  of  the  Eight  Oil  Compam^  in  which 
he  was  a  stockholder. 

In  September,  1902,  Owen  was  ordered  by  Dumble 
to  report  to  Mr.  Kruttschnitt  in  San  Francisco  and 
he  inmiediately  thereafter  began  work  in  the  region 
around  McKittrick  (R.  1609,  2900).  March  25,  1903, 
Owen  wrote  Dumble  the  letter  set  out  on  pages  1615 
to  1620  of  the  record  and  enclosed  a  map  which  was 
introduced  in  evidence  as  Exhibit  157.  This  map 
delineates  the  McKittrick  anticline  and  the  principal 
Elk  Hills  anticline.  In  the  letter  enclosing  the  map 
this  is  not  called  bv  Owen  the  Elk  Hills  anticline, 
but  "the  fold  north  of  McKittrick".    Of  it  he  says: 

"The  fold  north  of  McKittrick  and  running 
nearly  parallel  passes  through  sec.  5  and  9  be- 
tween 11  and  15  through  13  of  30-22.  This  fold 
exposes  the  oil  sands  in  several  places  and  in 
some  of  the  exposures  the  sands  are  strongly 
impregnated  with  Asph  and  producing  wells 
ought  to  be  found  along  this  exposure,  the  as- 
phaltum  exudes  through  overlying  clays  in  many 
places"    (R.  1617). 


241 

In  a  report  introduced  as  exhibit  4-R  referring  to 
the  Elk  Hills  anticline,  Owen  says: 

"Town  30  S,  Range  22  E,  M.  D.  M.  The  anti- 
clinal fold  mentioned  as  running  through  Town 
30  S,  Range  21  E  continues  through  this  town- 
ship. This  anticline  is  not  as  sharp  as  the  Mc- 
Kittrick  anticline  and  as  a  consequence  the  area 
of  available  oil  sands  are  much  more  than  the 
McKittrick  fold.  This  anticline  enters  the  town- 
ship near  the  northwest  corner  of  section  6  and 
leaves  it  near  the  corner  of  section  25.  Two 
producing  oil  wells  have  been  drilled  in  section 
6  on  this  anticline  and  bituminous  deposits  are 
found  in  numerous  places  along  the  anticline." 
(R.  1634.) 

The  reference  here  is  to  the  fold  north  of  the  Mc- 
Kittrick fold  and  running  nearly  parallel,  above 
referred  to,  and  it  is  clear  that  Owen  meant  the  Elk 
Hills  anticline  which  on  exhibit  157  he  delineates  as 
entering  township  30-22  in  section  6  and  extending 
through  sections  9,  20,  29,  28,  27,  26,  25  and  36  of 
township  30-23;  and  it  is  of  this  anticline  that  he 
says:  "Producing  wells  ought  to  be  found  along 
this  exposure",  thus  indicating  his  belief  in  the  oil 
character  of  some  of  the  very  sections  in  suit. 

In  1904  Owen  approved  the  list  of  lands  to  be 
transferred  from  the  Southern  Pacific  Railroad 
Company  to  the  Kern  Trading  and  Oil  Company, 
which  list  included  section  31  of  30-23,  the  township 
in  which  the  lands  in  suit  lie  (R.  1611-12-13-14),* 
thus  showing  his  belief  in  the  oil  character  of  a  pat- 
ented section  adjoining  the  lands  in  suit  which  were 
then  unpatented. 


212 

Professor  Owen's  knowledge  of  and  belief  in  tlie 
oil  cliaracter  of  the  lands  in  suit  prior  to  patent  is 
shown  by  the  testimony  of  numerous  witnesses  for 
the  government  who  knew  him  at  that  time  and 
came  in  frequent  contact  with  him  in  the  region 
around  McKittrick. 

M.  S.  Wagy  testified  that  in  1900  he  showed  Owen 
sand  taken  from  the  seepage  or  blowout  on  32  of 
30-24  and  that  subsequent  to  that  time,  in  1900  or 
1901,  Owen  said  he  thought  that  that  country  was 
good  and  later  told  him  that  it  was  oil  territory  (R. 
182-3-4-5). 

W.  E.  Ott  testified  that  Owen  told  him  that  the 
territory  in  general  from  McKittrick  to  Sunset 
would  be  a  great  field  (R.  277) ;  that  Owen  went 
everywhere  around  that  country  examining  land. 

S.  P.  Wible  testified  that  in  1903  and  1904  he  went 
through  the  Elk  Hills  with  Owen  who  had  been  there 
previously  and  was  going  to  show  him  the  outcrop 
on  32  of  30-24.  Owen  was  examining  and  classify- 
ing Southern  Pacific  Railroad  land  and  was  going 
around  the  countrv  in  the  vicinitv  of  McKittrick  for 

!-■■  *■' 

a  year  or  more,  seeming  to  be  very  well  posted.  He 
examined  practically  all  the  railroad  lands  in  Kern 
county  and  in  the  Coalinga  field,  classifying  them. 
He  had  examined  lands  in  the  Elk  Hills  in  behalf  of 
the  Southern  Pacific  Railroad  Company,  having  first 
gone  there  in  the  Fall  of  1901  or  the  Spring  of  1902 
(R.  319).  Wible  had  discussed  with  Owen  the  geo- 
logic conditions  and  oil  possibilities  of  lands  in  the 


243 

Yicinitv  of  :\IcKittriek  a  great  deal  and  Owen  was 
very  familiar  with  the  formations  of  that  country 
and  particularly  with  reference  to  the  Elk  Hills, 
including  township  30-23,  as  well  as  the  other  town- 
ships there.  Owen  told  him  that  he  believed  the  oil 
measures  lay  under  the  Buena  Vista  Hills  and 
thought  they  lay  very  deep  under  the  Elk  Hills  (R. 
320).  Owen  was  acquainted  with  the  Elk  Hills  anti- 
cline and  knew  of  it  before  he  and  AYible  went  into 
the  hills  together.  As  early  as  1901  there  were  two 
oil  wells  on  section  6  of  30-22  and  one  on  section  1 
of  30-22  on  the  Elk  Hills  anticline.  Before  1904 
Owen  spoke  with  him  several  times  of  the  oil  show- 
ing in  section  32  of  30-24  and  from  a  conversation 
concerning  the  Elk  Hills  as  oil  territory  Wible  knew 
that  Owen  regarded  them  as  such  (E.  321).  Owen 
seemed  to  feel  quite  sure  that  there  were  oil  lands  in 
the  vicinity  of  the  oil  croppings  in  32  of  30-24.  If 
Owen  heard  of  any  oil  seeps  he  hunted  them  up,  they 
being  one  of  the  main  things  he  was  looking  after 
when  Wible  first  met  him.  Owen  carried  maps  or 
plats  of  the  different  townships  in  the  Elk  Hills  and 
elsewhere  and  put  down  on  them  information  that 
he  obtained  with  reference  to  the  mineral  character 
of  the  land.  Wible  was  intimately  acquainted  with 
Owen  from  1902  down  to  the  time  of  Owen's  death 
(E.  322)  ;  and  Erwin  Owen,  the  son  of  Josiah,  testi- 
fied that  Wible  was  his  father's  most  intimate  friend 
and  that  whatever  he  said  of  him  could  be  believed. 

Wible  discussed  with  Owen  the  lands  in  30-23  in 
1904,  about  the  time  ivlien  they  were  selected  hy  list 


244 

89,  and  Oiven  told  him  tliat,  if  the  railroad  selected 
those  lands,  they  woidd  he  selecting  mineral  lands; 
that  the  railroad  had  no  right  to  select  them,  as  he 
had  reported  them  as  mineral  layid,  this  remark  hav- 
ing been  made  on  the  road  between  tlie  Elk  Hills  and 
Headquarter 's  ranch.  Ko  one  was  present  but  Owen 
and  Wible  and  Owen  stated  that  he  had  reported 
those  lands  as  mineral  lands.  He  was  quite  sure  that 
this  conversation  took  place  in  1904  (R.  324-5). 

Charles  F.  Haberkern  knew  Josiah  Owen  very 
intimately  and  had  been  in  the  Elk  Hills  with  him  as 
long  as  five  days  at  a  time.  They  looked  all  over  the 
count rv  and  he  showed  Owen  the  minerals  he  found 
there  (R.  349).  In  August  or  September,  1904, 
Haberkern  and  Owen  went  all  over  the  Elk  Hills 
from  one  end  to  the  other  on  both  sides  of  the  slope. 
Haberkern  knew  township  30-23  and  stated  that  in 
their  examination  they  passed  over  the  lands  in  that 
township  which  lie  in  the  hills  and  constitute  the 
south  half  of  the  township.  (This  includes  the  lands 
in  suit.)  They  also  went  to  the  townships  to  the 
east  and  west  of  30-23.  The  witness  knew  of  an  oil 
showing  or  outcrop  or  gas  blow-out  in  the  northwest 
quarter  of  32  of  30-24.  In  August  or  September, 
1904,  he  and  Owen  visited  that  oil  seep  and  went  all 
over  the  township.  Owen  making  a  careful  exami- 
nation of  the  lands,  and  at  that  time  they  discussed 
the  possibility  of  that  country  for  oil,  fuller 's-earth 
and  gypsum.  Owen  told  him  that  the  land  was  very 
valuable  for  fuller's  earth  and  gypsum,  but  that  he 
thought  that  there  was  oil  there,  but  that  it  was  very 


245 

deep  and  it  would  not  pay  to  go  after  it  (R.  350). 
Owen  told  him  that  there  was  a  possibility  of  oil  in 
the  Elk  Hills,  but  that  it  was  from  three  to  four 
thousand  feet  deep.  It  would  not  pay  at  that  time 
because  oil  was  very  low  at  that  time. 

Charles  Brisco  about  1901  or  1902  found  a  small 
brea  bed — dried  oil,  dried  asphaltum  on  the  east  slope 
of  the  Elk  Hills  about  12  or  15  miles  south  and  east 
of  McKittrick  and  reported  his  discovery  to  several 
people.  Sometime  before  1904  he  took  Josiah  Owen, 
who  he  said  was  a  mineralogist  for  the  Southern 
Pacific,  over  to  this  brea  bed  in  the  Elk  Hills  (R. 
335).  "When  I  told  him  about  my  discovery  he 
wanted  to  know  if  I  could  take  him  to  it  and  I  did." 
Owen  made  a  careful  observation  and  examination 
of  the  lands  as  they  passed  through  them.  When 
they  came  to  the  brea  bed,  he  showed  it  to  Owen. 
Owen  lighted  it  (R.  336).  Owen  told  Brisco  what 
his  business  was— that  he  was  an  expert  experting 
the  territory  as  a  mineralogist  for  the  Southern 
Pacific.  On  the  occasion  in  question  while  they  were 
traversing  the  Elk  Hills,  Owen  told  Brisco  that  it 
was  good  oil  territory,  saying  that  he  thought  it 
would  he  the  best  territory  of  any,  hut  ivould  he  very 
deep.  He  was  not  certain  whether  this  conversation 
was  on  that  particular  trip.  He  had  several  con- 
versations with  Owen  in  regard  to  these  lands  before 
August,  1904.  Owen  took  samples  of  shale  or  sand 
of  the  different  sections  they  traversed.  Just  before 
giving  his  testimony  Brisco  went  with  F.  Oskar 
Martin,  a  mineral  inspector  of  the  General  Land 


246 

Office,  over  the  route  which  he  followed  when  he 
took  Owen  into  the  hills  and  Martin  made  notes  as 
they  went  along  to  identify  places  to  which  they 
went  (R.  337) ;  and  Martin  testified  that  the  location 
of  the  oil  seep  to  which  Brisco  referred  was  in  sec- 
tion 32  of  30-24  (R.  343-4). 

Brisco  further  stated  that  Professor  Owen  re- 
ferred to  the  character  of  the  oil  which  would  be  pro- 
duced in  the  Elk  Hills  and  stated  that  he  thought  it 
would  be  better,  as  it  would  be  deeper,  and  there 
would  be  more  gases  in  it  (R.  338).  Brisco  explained 
that  he  had  some  land  located  in  the  Elk  Hills  and, 
thinking  that  Owen  had  good  judgment,  "dug  into 
him  to  ask  about  that  land".  He  said  to  Owen :  "I 
have  got  some  land  located  there  myself  and  I  would 
like  to  have  you  go  in  there  to  see  what  you  think 
about  it."  After  getting  Owen  in  there,  he  asked 
him  two  or  three  times  what  he  thought  of  it  and 
finally  got  this  answer:  "This  is  good  enough,  my 
boy.    Hold  on  to  it." 

N.  C.  Farnum,  who  had  had  large  experience  in  oil 
matters,  met  Professor  Owen  in  Bakersfield  in  1903. 
Owen  stated  to  him  that  he  thought  the  whole 
country  from  30-22  clear  to  the  lake  teas  oil  territory, 
as  he  had  examinM  it  carefully.  The  lake  referred 
to  is  the  Buena  Vista  lake  situated  in  township  31 
South,  range  25  East.  He  testified  that  that  would 
include  townships  30-22,  30-23,  and  30-24  and  that  it 
was  in  the  Spring  of  the  year  1903,  he  thought,  when 
Owen  told  him  this  (R.  508). 


247 
On  cross-examination  Farnum  testified  as  follows : 

"I  met  Mr.  Owen  in  Bakersfield  in  1903.  We 
discussed  the  general  trend  of  the  Elk  Hills.  I 
asked  him  whether  he  thought  we  would  likely 
get  oil  and  he  said  'Yes'— I  don't  know  his  exact 
language.  He  said  something  about  the  depth 
we  would  have  to  go,  but  I  can't  say  what  it  was 
now.  I  am  not  sure  whether  he  said  it  was  three 
or  four  thousand  feet.  I  think  he  said  it  would 
be  deep.  I  thought  myself  it  would  be  at  least 
two  thousand  feet,  but  Mr.  Youle  always  con- 
tended it  was  shallow  territory  by  reason  of  the 
uplift.  The  hill,  he  said,  made  an  uplift ;  it  was 
not  caused  bv  erosion,  but  by  an  elevation  from 
below."    (R.521.) 

Now,  it  is  true  that  appellants'  chief  expert  wit- 
ness, F.  M.  Anderson,  testified  that  in  March,  1903, 
he  and  Owen  stood  on  a  hill  north  of  the  Temblor 
valley,  where  they  had  a  very  good  view-point  of  all 
the  surrounding  regions  towards  the  valley  and  along 
the  flank  of  the  Temblor  Eange,  and  had  a  conversa- 
tion in  which  Owen  told  him  that  he  had  been  there 
about  a  month  and  had  visited  about  all  parts  of  the 
vallev  contiguous  to  McKittrick.     Owen  told  him 
what  he  had  seen  over  in  the  Elk  Hills  and  told  him 
that   it   looked   to   him   like   an   anticline    running 
throuo-h  these  hills  from  northwest  to  southeast,  but 
that  there  was  no  outcrop  on  the  surface  from  which 
he  could  learn  anything.     Anderson  asked  Owen  if 
it  looked  anything  like  oil  land  over  there  and  Owen, 
he  claims,  said  that  he  had  seen  nothing  that  looked 
like  oil  and  that  he  did  not  think  it  was  an  oil  dis- 
trict or  that  it  was  oil  land.     Anderson  remarked 
that  it  appeared  to  him  that  the  Elk  Hills  were  "a 


248 

long  ways  out"  from  the  foothills  of  the  Temblor 
Eange  where  the  oil  was  likely  to  be  and  that  Owen 
said  "yes,  it  appeared  that  way  to  him";  that  was 
about  as  much  as  Anderson  recalled  of  the  conversa- 
tion (R.  2381-2-3).  The  foregoing  evidence  of  An- 
derson is  relied  upon  by  appellants  to  contradict  the 
testimony  of  witnesses  whose  evidence  has  been 
stated  above.  Anderson  was  a  vitally  interested  wit- 
ness for  apj)ellants,  while  the  witnesses  whose  testi- 
mony is  given  above  had  no  interest  in  the  result  of 
this  litigation.  Furthermore,  their  testimony  is  con- 
sistent with  Owen's  written  declarations  found  in 
the  letters  above  quoted  from,  w^hile  the  views 
attributed  to  him  by  Anderson  are  contradictory 
thereof.  In  addition,  that  the  belief  attributed  to 
Owen  by  Wagy,  Ott,  Wible,  Haberkern,  Brisco  and 
Farniun  was  Owen's  actual  opinion  appears  from 
certain  locations  in  the  Elk  Hills  in  which  he  was 
interested;  and  his  effort  to  secure  for  their  mineral 
value  lands  lying  there  is  not  consistent  with  the 
views  attributed  to  him  by  Mr.  Anderson. 

As  already  stated,  in  August  or  September,  1904, 
C.  F.  Haberkern  took  Professor  Owen  to  the  out- 
crop in  section  32  of  30-24.  In  pursuance  of  the 
examination  thereof  made  bv  Owen  and  himself,  he 
and  his  associates  located  lands  in  township  30-23. 
They  located  only  the  even-numbered  sections  for 
the  reason  that  Owen  said  that  he  was  working  for 
the  railroad  company  and  told  Haberkern  not  to 
take  any  railroad  land.  By  railroad  lands  he  under- 
stood that  Owen  meant  the  odd-numbered  sections 


o 


49 

of  30-23.    That  township  was  not  surveyed  in  1901. 
Afterwards  the  Eight  Oil  Company  was  organized. 
Owen  told  Haherkern  that  he  wanted  to  get  some 
stock  in  that  company  for  William  Hmit  and  Prof. 
Dumble  and  arrangements  to  that  end  were  perfected. 
The  statement  which  Owen  made  to  him  about  keep- 
ing off  the  odd-numbered  sections  in  30-23  was  made 
in  August  or  September,  1904  (R.  350-1).   The  first 
location  he  made  in  township  30-23  was  made  in  1907. 
He  had  been  there  about  a  dozen  times  with  Owen 
and  in  1907  he  followed  Owen's  suggestion  about  not 
locating  anything  except  even-numbered  sections  (R. 
351).     Perhaps  a  month  before  Haberkern  and  his 
associates  made  their  locations  in  1907  they  talked 
the  matter  over  with  Owen  and  Owen  told  them  to 
locate  on  the  even-numbered  sections  in  30-23.     He 
knew  that  it  was  in  August  or   September,   1904, 
that  he  showed  Owen  the  railroad  land  in  the  Elk 
Hills  w^here  the  mineral  was  and  said:    "How  about 
locating  thoseT';  and  Owen  said  "No."    (R.  352.) 
He  was  positive  that  it  was  in  1904  and  not  in  1907 
that  Owen  told  him  that  he  was  working  for  the 
railroad  company  and  that  it  would  not  look  good 
for   him   to    locate   the    odd-numbered    sections   in 
30-23  (R.  354-5). 

The  Eight  Oil  Company  was  organized  in  April, 
1909,  and  at  the  time  of  its  organization  Josiah  Owen 
had  eight  thousand  shares  of  its  capital  stock  (R. 
347).  The  other  stockholders  were  T.  E.  Klipstein,  H. 
T.  Tupman,  E.  W.  McCutcheon,  W.  E.  Richardson, 
Charles  Haberkern  and  his  wife.     When  this  com- 


250 

panv  was  organized,  it  had  even-numbered  sections 
in  township  30-24  and  some  of  the  people  that 
were  interested  in  it  had  some  lands  in  30-23 
(E.  323).  Professor  Owen  furnished  information 
of  the  geologic  character  of  the  holdings  of  the  Eight 
Oil  Company  to  that  company. 

Captain  W.  H.  McKittrick  in  1899  made  an  in- 
vestment in  some  mining  property  in  Mexico  on 
the  advice  of  Josiah  Owen  which  did  not  turn  out 
very  well  and  Owen  constantly  apologized  for  mak- 
ing a  bad  investment  for  him.  The  witness  met 
Owen  on  an  Oakland  boat  in  1903  or  1901,  when 
Owen  said  to  him:  "I  am  awfullv  sorrv  about  our 
investment  down  there,  but  I  have  something  that 
I  will  put  you  onto  that  will  make  you  more  money 
than  the  mine  we  might  have  had  in  old  Mexico." 
The  witness  asked  Owen  what  it  was  and  Owen 
replied  that  he  was  not  at  liberty  to  tell  him  then, 
but  would  tell  hun  when  the  proper  time  came.  In 
1907  the  witness  met  Owen  in  Bakersfield  and  Owen 
told  him  that  he  was  then  ready  to  put  him  onto 
what  the}'  were  talking  about  in  1903.  Otcen  told 
him  that  he  had  been  working  out  in  the  Elk  Hills 
for  a  number  of  years  and  that  no  one  knew  that 
he  had  been  out  there  at  all  and  that  the  iritness 
shoidd  saij  notJiing  about  Ins  being  out  there;  that 
he  had  been  out  there  in  the  employ  of  the  Southern 
Pacific  Railroad  and  had  located  large  deposits  of 
fuller 's-earth.  Owen  stated  that  he  would  name 
four  men  and  that  the  witness  could  name  four  and 
that  thev  would  go  out  there  and  take  as  manv  sec- 


251 

tions  as  thej^  cared  for,  as  they  would  all  be  open 
on  the  first  of  January,  1909.     Owen  said  at  that 
time  that  there  was  a  possihility  of  oil  there,  but 
that  oil  could  not  be  found  under  3100  feet.     Owen 
told  the  witness  on  several  occasions  that  Professor 
Dumble  was  his  partner  in  any  venture  that  he  might 
make  (E.  527-8).     Owen  told  him  that  he  knew  in 
1903  that  there  were  thousands  of  tons  of  fuller 's- 
earth  in  the  Elk  Hills;  that  there  might  he  a  possi- 
hility of  oil  there,  hut  that  it  would  not  he  found 
within  less  than  3100   feet    and    that  he    could  not 
tell  whether  it  was  in  paying  quantities  or  yiot,  hut 
that  he  helieved  that  oil  was  there  at  that  depth 
(R.   535).     The   lands   were   located   in   1909— sec- 
tions 20,  22,  21,  26  and  28  of  30-23  (R.  536).     The 
witness   thought   that   they   had   developed   fuller's 
earth  on  all  of  the  sections  mentioned,  but  that  they 
didn't  sell  any  of  it.     They  applied  for  patent  on 
the   basis   of   their    fuller 's-earth    discoveries     and 
their  applications  were  contested  by  certain  persons 
backed  by  the  Associated  Oil  Company  who   con- 
tended that  the  land  was  oil  land  and  at  the  time 
of  trial  patents  had  not  issued  (R.  536-7). 

The  foregoing  evidence  of  Captain  McKittrick 
shows  clearly  that  as  early  as  1903  Professor  Owen 
thought  that  there  was  oil  in  the  Elk  Hills.  It  is 
true  that  he  thought  that  it  lay  deep;  but  it  no- 
where appears  that  he  thought  that  its  probable 
depth  was  prohibitive.  The  fact  that  none  of  the 
alleged  fuller's  earth  was  ever  sold  shows  that  it 
was  not  of  commercial  quality  and  sheds  a  flood  of 


252 

light  upon  the  view  of  Josiah  Owen  that  this  enter- 
prise would  more  than  compensate  Captain  Mc- 
Kittrick  for  his  losses  in  Mexico.  The  true  signifi- 
cance of  the  situation  lies  in  the  fact  that,  if  patents 
could  have  been  secured  by  reason  of  these  surface 
discoveries  of  fuller 's-earth,  the  oil  that  lav  at 
depth  in  the  land  would  have  become  the  property 
of  the  patentees.  It  required  large  outlays  of  money 
in  those  days  to  drill  wells  and  a  single  discovery 
made  possible  a  patent  to  an  area  not  greater  than 
160  acres.  Thus,  to  have  secured  patents  to  several 
sections  in  the  Elk  Hills  because  of  discoveries  of 
oil  would  have  necessitated  a  very  large  expenditure 
of  money,  while  a  mere  pittance  might,  if  the  scheme 
had  been  successful,  have  enabled  the  interested 
parties  to  secure  patents  based  upon  surface  dis- 
coveries of  fuller's  earth.  The  only  possible  con- 
struction to  be  placed  upon  this  situation  is  that 
Owen  thought  that,  by  claiming  the  lands  on  account 
of  the  discovery  of  fuller 's-earth,  he  and  his  asso- 
ciates could  secure  patents  to  them  and  thereafter 
develop  or  lease  or  sell  them  for  their  value  as  oil 
lands.  This  view  of  the  matter  explains  the  secrecy 
of  his  movements  and  of  the  enterprise — the  secrecy 
with  which  he  made  his  investigation  and  the  secrecv 
which  he  enjoined  upon  Captain  McKittrick.  If 
Owen's  faith  had  been  in  the  "thousands  of  tons  of 
fuller's  earth",  there  would  have  been  no  point  to 
his  idea  that  secrecy  was  the  part  of  wisdom  and 
expedience. 

It  is  respectfully   submitted  that   the   testimony 


253 

recited  conclusively  establishes  Josiah  Owen's  belief 
in  190i  in  the  oil  character  of  the  lands  in  suit. 

C.  W.  Eberlein's  belief: 

Much  will  be  said  of  the  testimony  of  this  official 
of  the  Southern  Pacific  Eailroad  Company  in  con- 
nection with  the  discussion  of  the  subject  of  fraud. 
It  suffices  at  this  tune  to  say  that  he  was  the  acting 
land  agent  of  the  Southern  Pacific  Eailroad  Com- 
pany who  signed  the  application  to  select  the  lands 
in  suit  and  filed  list  89  accompanied  by  an  affidavit 
that  the  lands  in  suit  were  non-mineral  lands  of  the 
character  contemplated  by  the  grant.  It  is  true 
that,  when  testifying  as  a  witness  for  the  govern- 
ment, Eberlein  stated  that  he  did  not  at  the  time 
of  fihng  the  selection  list  suspect  the  oil  character 
of  the  lands  in  suit.  However,  there  are  just  two 
things  to  contradict  this  statement. 

After  the  original  selection  list  No.  89  had  been 
filed  bv  Eberlein  and  had  been  rejected  by  the 
Redster  and  Eeceiver  because  of  the  outstanding 
suspension  of  February  28,  1900,  already  herein  at 
some  length  discussed,  Eberlein  wrote  a  letter  to 
D.  A.  Chambers,  the  Washington,  D.  C,  attorney  of 
appellants,  concerning  the  matter  of  an  appeal  from 
the  decision  of  the  Eegister  and  Eeceiver  to  the 
Commissioner  of  the  General  Land  Office.  That 
letter  is  set  out  in  full  on  1577-1580  of  the  record. 
After  discussing  the  matter  of  procedure  with  ref- 
erence to  the  appeal  and  the  wise  course  to  follow 


254 

to  the  end  tliat  the  patenting  of  the  lands  in  suit 
might  be  expedited,  Eberlein  writes: 

"I  am  particularly  anxious  in  regard  to  this 
list  as  tlie  lands  adjoin  the  oil  territory  and 
Mr.  Kruttsclmitt  is  very  solicitous  in  regard  to 
it."    (Italics  supplied.) 

Eberlein  testified  that  he  had  recently  taken 
charge  of  land  matters  for  the  railroad  company  in 
California  and  that  he  knew  little  or  nothing  con- 
cerning these  lands ;  but  one  thing  with  reference  to 
the  state  of  his  knowledge  is  perfectly  plain  and 
that  is  that  he  knew  that  "the  lands  adjoin  the  oil 
territory"  and  realized  the  significance  of  that  fact. 

The  other  circumstance  reflecting  light  upon  Eber- 
lein's  thought  concerning  the  lands  in  suit  is  his 
unwillingness  that  the  geologists  of  the  Southern 
Pacific  Company  should  examine  unpatented  land, 
that  unwillingness  being  based  upon  his  appre- 
hension that  they  might  discover  things  which  would 
charge  the  applicant  railroad  company  with  notice 
of  the  mineral  character  of  the  lands  to  which  it 
was  endeavoring  to  secure  agricultural  patents.  And 
what  were  those  things  which  expert  oil  geologists 
could  and  inevitably  would  discover  in  making  an 
examination  of  lands  "adjoining  the  oil  territory" — 
lands  on  the  apex  of  a  "dome"  considered  the  most 
favorable  structure  for  the  accumulation  of  oil? 
It  will  be  remembered  that  the  regulations  made  by 
the  Secretary  of  the  Interior  required  that  each 
selection  list  be  accompanied  by  the  affidavit  of  the 
land  agent  of  the  applicant  railroad  to  the  effect 


255 

that  tlie  lands  applied  for  were  non-mineral  agri- 
cultural lands  and  of  the  cliaracter  contemplated  by 
the  grant  of  1866.     As  heretofore  pointed  out,  this 
imposed  upon  Eberlein  the  duty  of  so   informing 
himself  as  to  he  ahle  to  speak  the  truth.     The  re- 
quirement  in   question   went   further  than   as   just 
indicated  and  made  it  obligatory  upon  him  to  make 
oath  that  he  had  caused  the  lands  apphed  for  to  be 
examined  as  to  their  mineral  or  non-mineral  char- 
acter by  employees  of  the  applicant  company.    Not- 
withstanding this  Eberlein  insisted  that  an  embargo 
be    placed    upon    the    examination    of    unpatented 
granted  lands  of  the  railroad  by  geologists  of  the 
Southern  Pacific  Company,  who  have  been  shown  to 
have  been  Professors  Dumble,  Owen  and  Anderson, 
for  fear  that  they  might  discover  and  disclose  that 
these  lands,  instead  of  being  agricultural,  were  min- 
eral in  character     And  so  Eberlein  protested  to  his 
chief  in  New  York,  Judge  AY.  D.   Cornish,  Vice- 
President  of  the  Southern  Pacific  Company  and  an 
officer  of  the  Southern  Pacific  Railroad  Company 
as  well,  against  the  practice  of  Mr.  Diunble  and  his 
men  of  examining  lands  not  yet  patented  to   the 
railroad    company.      He    stated   that   he    protested 
and  protested  vigorously  and  also  had  talks  with 
Mr.  Markham,  General  Manager  of  the   Southern 
Pacific  Company,  about  the  matter,  pointing  out  to 
him  that  "people  acting  without  any  kind  of  knowl- 
edge of  what  they  were  doing,  without  any  reference 
to  the  selection  list  of  the  company,  without  any 
reference  that  even  the  lands  w^ere  patented  or  even 
surveyed — that  it  was  charging  the  company  with 


256 

notice,  that  it  didn't  charge  Mm  with  notice,  but  it 
certainly  would  be  the  ground  on  which  to  get  in 
and  protest  the  patents  or  protest  the  lists — and  so 
the  fact  turned  out  to  be"  (R.  1090-1-2-3). 

Eberlein's  protests  culminated  in  1908  in  an  order 
made  by  the  New  York  Office  forbidding  the  giving 
out  of  printed  lists  of  lands  and  the  examination  of 
unpatented  lands  by  oil  experts.  Subsequently,  it 
was  provided  that  Dumble  and  his  men  should  not 
be  furnished  with  any  data  whatever  except  as  to 
patented  land,  for  the  reason  that  such  information 
would  be  embarrassing  to  them  and  to  the  company 
and  might  make  them  witnesses  against  the  com- 
pany in  mineral  contests. 

This  is  the  substance  of  the  letter  written  Feb- 
ruary 22,  1908,  from  New  York  by  Eberlein  to  his 
chief  clerk,  Conlin.  The  letter  was  written  under  the 
authority  of  Judge  Cornish  who  had  charge  of  the 
land  affairs  of  the  Southern  Pacific  Railroad  Com- 
pany (R.  1094-5-6).  Eberlein  testified  that  the 
statement  in  this  letter — "the  examination  of  our 
S.  P.  lands  not  yet  patented  by  our  oil  experts  must 
be  stopped,  as  information  that  they  may  obtain  or 
give  as  to  the  mineral  eharacter  prior  to  patent  ivill 
forever  prevent  our  getting  patents" — was  a  con- 
tinuation by  him  of  the  accustomed  protesting  which 
had  started  as  soon  as  the  Kern  Trading  and  Oil 
Company  lease  had  been  offered  to  him  for  execution 
in  1901  (R.  1097-8). 


257 

Another  side-light  is  thrown  upon  Eberlein's 
thought  concerning  the  lands  in  suit  in  a  letter 
written  by  him  to  Judge  Cornish  September  3, 
1904,  in  which  he  used  this  language: 

"We  have  selected  a  large  body  of  lands 
interspersed  with  the  lands  sought  to  be  con- 
veyed by  this  lease  and  which  we  have  repre- 
sented as  non-mineral  in  character";  and 
"should  the  existence  of  this  lease  become  known 
it  would  go  a  long  way  toward  establishing  the 
mineral  character  of  the  lands  referred  to  and 
which  are  still  unpatented." 

Eherlem  testified  that  that  lease  put  Mm  on  in- 
quiry as  to  ivliy  the  lands  included  in  it  were  to  he 
conveyed  to  the  Kern  Trading  and  Oil  Company, 
am  oil  development  company,  ivJien  they  were  sup- 
posedly non-mineral  lands  (R.  1090) ;  and  he  said 
"/  felt  and  I  knew  certainly  it  ivoidd  ivork  against 
the  company''  (E.  1091). 

Enough  has  been  said  to  show  that  Eberlein,  the 
acting  land  agent,  whatever  may  have  been  the  state 
of  his  actual  knowledge  concerning  the  lands  in 
suit,  suspected  in  1903  and  with  good  reason  that 
they  were  oil  lands;  and,  if  he  did  not  admit  belief 
in  their  oil  character,  it  was  for  the  reason  that  to 
have  done  so  would  have  stultified  him  and  con- 
victed him  of  a  serious  dereliction  of  duty;  for, 
while  he  might  still  have  taken  the  position  that 
at  the  time  of  making  the  first  non-mineral  affi- 
davit he  really  knew  little  or  nothing  about  the 
lands  selected,  yet,  in  the  light  of  what  he  learned 


258 

afterwards  and  in  view  of  the  fears  which  he  ex- 
pressed and  the  protests  which  he  made,  it  is  not 
conceivable  that  he  did  not  suspect  and,  indeed, 
believe  in  the  oil  character  of  the  lands  which  he 
was  assisting  his  employer  to  secure  under  an  agri- 
cultural grant. 

George  A.  Stone's  belief: 

At  the  time  of  testif.ying  as  a  witness  for  the 
government  George  A.  Stone  was  a  pensioner  of 
the  Southern  Pacific  Company.  He  was  in  the 
employ  of  the  Southern  Pacific  Company  from  1865 
to  the  latter  part  of  1907.  During  the  last  years  of 
his  employment  he  was  clerical  assistant  to  the 
acting  land  agent,  C.  W.  Eberlein,  and  under  his 
direction  prepared  in  1903  selection  list  nmnl^er  89. 
He  was  acquainted  with  township  30-23,  but  made 
no  examination  of  the  lands  in  suit  for  the  purpose 
of  selecting  them,  such  knowledge  as  he  had  being 
general  in  character  from  his  general  knowledge  of 
the  countr}^  (R.  1028-9).  As  already  indicated  in 
connection  with  the  belief  of  Professor  Humble, 
Mr.  Stone  thought  that  Humble  pressed  the  selection 
of  the  lands  in  suit  because  he  thought  that  they 
were  oil  lands.  At  the  end  of  Hecember,  1907, 
Stone  was  discharged  from  the  service  of  the 
Southern  Pacific  Company  by  Eberlein. 

January  8,  1908,  Stone  wrote  a  letter  to  E.  E. 
Calvin,  General  Manager  of  the  Southern  Pacific 
Company,  in  which  he  referred  to  his  dismissal  by 
Eberlein  and  expressed  the  hope  that  Mr.  Calvin, 


259 

in  fairness  to  him  and  for  tlie  best  interests  of  the 
company,  would  carefully  investigate  the  matter 
and  arrange  for  a  transfer  to  some  other  employ- 
ment (R.  3118).  He  sent  a  cojjy  of  this  letter  to 
Mr.  Kruttschnitt  on  the  same  day.  His  letter  to 
Mr.  Kruttschnitt  is  plaintiff's  Exhibit  5-N  and  is  as 
follows : 

"Dear  Sir: 

I  enclose  herewith  copy  of  letter  mailed  to- 
day to  Mr.  Calvin  asking  for  transfer  from 
Land  Dejit.,  to  other  service.  As  land  examiner 
and  asst.  land  agent  I  have  obtained  a  knowl- 
edge of  the  lands  and  records  not  possessed  by 
any  other  official  or  employee  of  the  company, 
but  notwithstanding  this,  and  though  I  have  for 
several  years  borne  a  large  part  of  the  burden, 
Eberlein  has  seen  fit  to  force  me  out.  I  think 
the  equality  of  my  work  and  the  confidential 
character  of  my  employment  in  land  department 
indicate  that  the  best  interests  of  the  company 
will  be  served  by  not  turning  me  down  after 
long  and  faithful  service.  Mr.  John  D.  Isaacs 
has  known  me  for  many  years. 

"Yours  respectfully, 
"Geo.  A.  Stone, 

"169  Tenth  Street, 
' '  Oakland,  California. ' ' 
(R.  3117-18). 

Having  received  no  favorable  reply  to  the  letters 
above  mentioned.  Stone  on  March  23,  1908,  wrote 
Mr.  Kruttschnitt  another  letter  in  which  he  reviewed 
his  dismissal  and  former  letters  with  reference 
thereto  and  wrote  as  follows: 


li' 


I  served  the  company  faithfully  and  well 
many  years  and  hoped  that  its  interests  would 
always  be  mine,  but  if  a  hearing  and  fair  treat- 
ment are  not  accorded  me  without  further  delav 


260 

my  services  will  be  at  the  disposal  of  the  news- 
paper press,  the  United  States  Attorney  General 
and  others."   (R.  3116). 

Subsequently  Stone  was  placed  on  the  Southern 
Pacific  Company's  pension  list  and  he  was  its 
pensioner  while  testifying  as  a  witness  for  the 
goyernment.  When  subpoenaed  as  a  witness  he 
went  of  his  own  accord  and  informed  Mr.  Singer, 
of  the  law  department  of  apioellants,  of  that  fact 
and  on  the  yery  morning  on  which  he  was  sworn  as 
a  witness  he  had  told  counsel  of  record  for  appellants 
in  this  case  that  selection  list  89  was  made  up  at  the 
suggestion  of  Professor  Dumble.  Whatever  the 
state  of  Stone's  knowledge  or  ignorance  of  the  lands 
in  suit  may  have  been,  it  is  obvious  that  the  con- 
clusion which  he  drew  from  what  he  knew  concern- 
ing their  selection  was  that  they  were  mineral  lands 
and  were  coveted  by  appellants  as  such. 

D.  Burkhalter's  belief: 

D.  Burkhalter  in  1899,  1900  and  subsequently 
was  Division  Superintendent  of  the  Southern 
Pacific  Company  with  headquarters  at  Bakersfield 
(R.  3429).  He  did  not  testify  as  a  witness  in  this 
case  and  consequently  there  is  no  record  of  any 
expression  in  words  of  his  belief  concerning  the 
character  of  the  lands  in  suit;  but  there  is  an  ex- 
pression in  his  acts.  December  13,  1899,  together 
with  others  he  made  four  attempted  locations  cover- 
ing the  several  quarters  of  section  33  of  township 
30-24  (R.  3427-8-9).  Thus,  in  1902  the  Southern 
Pacific  Railroad  Company  obtained  an  agricultural 


261 

patent  to  a  section  of  land  which  in  December, 
1899,  one  of  its  division  superintendents  had  at- 
tempted to  locate  under  the  placer  mining  laws  as 
oil  land.  Comment  seems  hardly  necessary.  Burk- 
halter's  belief  is  obvious. 

Julius  Knittsclmitt's  belief: 

As  a  witness  for  appellants  Mr.  Julius  Krutt- 
schnitt.  former  General  Manager  and  at  the  time 
of  testifying  Chairman  of  the  Executive  Committee 
of  the  Board  of  Directors  of  the  Southern  Pacific 
Company,  was  most  loud  in  his  protestations  of 
ignorance  of  the  character  of  the  lands  in  suit  at 
the  time  of  their  selection  in  1903  and  at  the  time 
when  the  patent  thereto  was  obtained  in  1904.  The 
active  and  responsible  head  of  a  gigantic  railroad 
system  would  not  be  expected  to  remember  nine 
years  after  they  had  happened  all  of  the  details 
of  transactions  which  had  come  under  his  notice. 
A  contemporaneous  record  of  what  a  man  thinks 
is  far  more  reliable  than  his  memorv  of  what 
he  thought  or  believed.  Without  ascribing  to 
Mr.  Kruttschnitt  any  desire  to  tell  other  than  the 
whole  truth,  it  is  perfectly  fair  to  hold  that  those 
who  came  in  contact  with  him  rebus  gestihus  and 
reduced  to  writing  their  knowledge  of  his  state  of 
mind  were  in  a  more  favorable  position  to  give  a 
fair  version  of  what  he  thought  and  stated  than  he 
could  possibly  have  been  nine  years  after  the  event ; 
and  so  attention  is  invited  to  the  statement  of  C.  W. 
Eberlein  in  his  letter  of  December  10,  1903,  to  D.  A. 
Chambers,  Washington  attorney  of  aiDpellants.     In 


262 

that  letter,  writing  witli  reference  to  his  efforts  to 
secure  patent  to  the  lands  in  suit  and  referring  to 
secelction  list  No.  89,  he  says : 

"I  am  particularly  anxious  in  regard  to  this 
list  as  the  lands  adjoin  the  oil  territory  and 
Mr.  Kruttschnitt  is  very  solicitous  in  regard 
to  it."  (Italics  supplied.) 

There  is  something  peculiarly  suggestive  in  the 
connection  between  Mr.  Kruttschnitt 's  solicitude  and 
the  fact  that  the  "lands  adjoin  the  oil  territory". 
This  declaration  or  statement  of  Eberlein  was  made 
contemporaneously  with  the  main  event,  to  wit,  the 
effort  to  secure  patent  to  the  lands  in  suit.  How 
Eberlein  could  have  arrived  at  a  conclusion  with 
reference  to  Mr.  Kruttschnitt 's  attitude  towards  the 
matter,  unless  he  had  heard  some  expression  from 
him,  it  is  difficult  to  conceive.  It  has  already  been 
shown  that  Professor  Dumble  as  a  witness  for 
appellants  claimed  that  the  letter  which  he  wrote 
to  Mr.  Bancroft  suggesting  that  the  lease  to  the 
Kern  Trading  and  Oil  Company  be  held  up  until 
''that  danger  was  passed"  was  prompted  solely  by 
a  desire  to  accommodate  and  appease  Mr.  Eberlein. 
Mr.  Kruttschnitt  in  his  testimony  places  himself  on 
similar  ground  and  states  that  a  certain  telegram 
which  he  sent  to  Mr.  Chambers  was  transmitted 
solely  for  the  purpose  of  helping  Eberlein  along. 
There  should  be  little  wonder  then  that  Eberlein, 
when  testifying  as  a  witness,  contended  that  others 
tried  to  get  from  under  and  "pass  the  buck"  to  him. 
It  is  manifest  that  there  is  an  intimate  connection 


263 

between   Mr.    Kruttsclmitt's   ''solicitude"   and   the 
fact  that  "the  lands  adjoin  the  oil  "territory." 

F.  M.  Anderson's  belief: 

F.  M.  Anderson  was  a  geologist  in  the  employ  of 
appellants  in  1903  and  one  of  their  expert  witnesess 
at  the  trial.  He  was  most  positive  in  testifying 
that  the  Elk  Hills  were  not  oil  territory,  his  state- 
ment being  that  he  did  not  believe  the  sands  of  the 
Etchegoin  shoreline  could  have  been  carried  to  the 
position  of  the  Elk  Hills  and,  if  they  ever  were  or 
any  part  of  them  ever  reached  there,  they  would 
exist  in  very  thin  strata  only  sufficient  in  thick- 
ness to  allow  a  flow  of  oil  in  its  progress  of 
migration  elsewhere;  but  he  never  expected  to  find 
in  the  Elk  Hills  any  considerable  thickness  of  sand 
in  the  position  of  Etchegoin  or  any  other  for  the 
reason  that  they  were  in  their  geological  position  so 
far  awav  from  the  source  of  sand  and  material. 
This  idea  was  expressed  elsewhere  by  saying  that 
the  Elk  Hills  were  too  far  away  from  the  outcrop 
to  fill  (R.  2455-6).  He  stated  that  the  Elk  Hills 
were  "a  long  ways  out"  in  the  interior  basin — 
from  six  to  fourteen  miles  from  the  outcrop  of  the 
oil-bearing  source  (R.  2441).  Notwithstanding  his 
opinion  that  distance  from  the  outcrop  w-as  con- 
trolling and  therefore  eliminated  the  Elk  Hills  from 
the  category  of  oil-bearing  lands,  he  collaborated 
with  Dmnble  and  Owen  in  the  determination  in 
1903  of  the  lands  to  be  included  in  the  lease  to  the 
Kern  Trading  and  Oil  Company  for  oil  development 
purposes  (R.  2406)  and  reconnnended  the  inclusion 


264 

in  tliat  lease  of  section  31  of  30-23,  a  section  in  the 
very  township  in  which  the  lands  in  suit  lie  and  as 
distant  from  the  outcrop  as  they  (R.  2415).  Ref- 
erence to  the  last  cited  page  of  the  record  will  .show 
that  Mr.  Anderson  first  very  boastfully  testified  that 
he  had  never  recommended  to  Professor  Dumble  or 
to  anybody  the  inclusion  of  any  land  in  township 
30-23.  Then,  when  the  suggestion  came  from  counsel 
for  appellants,  wdio  knew  better  than  Anderson 
what  Anderson  had  done,  that  he  had  recommended 
the  inclusion  in  that  lease  of  section  31  of  30-23, 
a  section  in  the  very  township  in  which  the  lands  in 
suit  lie  and  as  distant  from  the  outcrop  as  they 
(R.  2415),  Anderson  proceeded  to  modify  his  fomier 
positive  statement. 

That  which  is  of  interest  and  concern  here  is  not 
what  Anderson  testified  to  and  thought  in  1912, 
but  his  opinion  or  belief  in  1903  and  1904.  Asked 
by  counsel  for  appellants  as  to  his  own  individual 
opinion  in  1903  and  1904  as  the  result  of  the  work 
and  examination  which  he  had  made  in  that  territory 
as  to  the  Elk  Hills  being  oil  lands,  he  replied: 

"My  conclusion  as  to  the  likelihood  of  the  Elk 
Hills  being  then  or  ever  being  oil  territory  was 
negative.  That  is  to  say,  that  I  did  not  believe 
the}^  were  oil-bearing  or  ever  would  be  found  to 
be  oil-bearino-,  at  least  not  in  paying  quantities, 
not  commercially  oil-bearing.  /  suppose  that  I 
did  expect  there  might  be  insignificant  deposits 
of  oil  found  in  there,  as  there  might  be  in 
any  part  of  the  country  between  Sunset  and 
Coalinga  if  there  was  a  well  put  down  in  those 
beds."  (R.  2454.) 


265 

This  is  a  concession  from  the  expert  who  testitied 
that  "it  obviously  is  impossible  for  any  geologist 
to  look  into  the  ground  below  the  surface  very  far. 
He  might  infer  various  things  and  come  to  some 
kind  of  conclusion,  but  he  certainlv  cannot  reac^h  a 
sound  conclusion  that  a  given  piece  of  land  will  be 
oil  producing  without  actually  drilling  it";  and  that 
drilling  "will  not  be  sufficient  to  determine  the  prob- 
lem of  its  commercial  value.  Its  commercial  value 
cannot  be  detemiined  by  drilling  alone,  but,  in  the 
event  that  oil  is  reached,  the  well  will  have  to  be 
put  on  the  pump  and  pumped  for  a  definite  number 
of  months  or  for  a  definite  period  of  time  in  order 
to  prove  satisfactorily  its  productive  capacity.  The 
final  and  ultimate  test  of  the  value  of  oil  lands  is 
the  actual  production  over  a  period  sufficient  to 
recover  all  costs  and  pay  interest  on  the  costs  and 
to  pay  a  proper  dividend  above  all  the  costs  and 
above  all  the  interest."  (R.  2548-9).  It  thus  appears 
that  in  1903  Mr.  Anderson  reached  a  conclusion 
upon  geological  evidence  alone  that  the  Elk  Hills 
probabl}^  contained  oil,  but  not  in  commercial  quan- 
tities ;  so  that  at  that  time  he  was  determining  with- 
out the  drill  what  in  1912  he  said  could  be  deter- 
mined only  with  the  drill  and  sustained  production. 

From  what  has  been  said  with  reference  to  the 
testimony  of  Mr.  Anderson  it  seems  clear  that  in 
1903  and  1904,  during  the  time  of  the  proceedings 
which  resulted  in  the  patent  now  assailed,  he  enter- 
tained the  belief  that  the  Elk  Hills  contained  oil. 
To  be  sure,  he  savs  that  he  doubted  whether  the  oil 


266 

was  present  in  commercial  quantities,  tliougli  ex- 
pressty  contending  that  that  fact  is  capable  of  deter- 
mination only  by  the  drill  and  subsequent  sustained 
production.  If  the  Elk  Hills  contained  oil  in  the 
quantity  in  which  Anderson  believed  that  it  existed 
there,  if  one  had  drilled  a  well  and  had  encountered 
it,  he  obviously  could  have  secured  from  the  govern- 
ment a  patent  to  the  land  under  the  placer  mining 
act.  If  this  be  true — and  it  is  necessarily  true — , 
then  the  lands  in  suit  were  not  such  as  were  subject 
to  selection  by  the  railroad  as  non-mineral  agri- 
cultural land.  That  is  to  say,  the  granting  act 
plainly  excluded  lands  both  within  the  primary  and 
indemnity  limits  which  were  subject  to  acquisition 
under  the  mineral  land  laws. 

The  necessary  conclusion  from  the  testimony  of 
Mr.  Anderson,  read  in  the  light  of  the  pertinent  laws 
of  the  United  States,  is  that  in  1903  and  1904  he 
believed  the  Elk  Hills,  including  the  lands  in  suit, 
to  he  territory  subject  to  acquisition  under  the 
mineral  land  laws  of  the  United  States  and  con- 
sequently not  subject  to  selection  by  the  railroad 
as  non-mineral  agricultural  lands. 

Belief   of  Appellants  as  evidenced  by  reservations   of  land   and  with- 
drawals of  land  from  sale: 

This  subject  has  already  been  covered  and  it  has 
been  shown  that  in  1899  J.  B.  Treadwell,  oil  expert 
of  appellants,  withdrew  large  areas  of  land  from 
sale   as   agricultural   land   so   that   they   might   be 


267 

developed  for  the  production  of  oil;  and  that  these 
withdrawals  included  lands  several  miles  further 
from  the  outcrop  than  the  farthest  lands  in  suit 
and  that  the  lands  in  suit  themselves  would  have 
been  included  in  these  withdrawals,  if  they  had  then 
been  patented.  Mr  Kruttschnitt  himself  threw  con- 
siderable light  upon  the  policy  of  appellants  in  this 
reo^ard  and  the  followino-  extracts  from  his  testi- 
mony  are  informing: 

"Eef erring  particularly  to  the  lands  which 
are  involved  in  this  suit,  the  first  information 
I  now  recollect  ever  having  received  concerning 
that  land  or  any  land  in  the  vicinity  was  in 
1903.  Mr.  Harriman  had  instructed  me  to  push 
the  use  of  oil  fuel  on  our  locomotives.  I  had 
done  a  little  in  this  direction  during  Mr.  Hunt- 
ing-ton's life  and  Mr.  Harriman  was  much 
impressed  with  the  economies  that  might  be 
effected  in  this  way. 

''Under  these  conditions  one  of  the  first  things 
to  be  done  was  to  ascertain  what  lands  the  com- 
pany had  which  were  available  for  oil  pro- 
duction. Mr.  Treadwell.  after  the  excitement 
resulting  from  the  finding  of  oil  in  Southern 
California,  had  recommended  for  reservation 
from  sale  nearly  all  of  the  indemnity  lands  in 
Southern  California.  It  was  evidence  to  me  that 
this  reservation  was  entirely  too  broad.  It 
took  the  company's  lands  entirely  off  the 
market,  so  when  Mr.  Humble  was  put  in  charge 
of  this  work-  one  of  the  first  things  I  told  him 
to  do  was  to  revieiv  these  reservations  of  lands 
from  sale  and  to  mal^e  up  a  list  of  those  lands 
the  department  should  not  he  permitted  to  sell 
(R.  3082). 

"I  instructed  Mr.  Humble  to  make  this  ex- 
amination some  time  in  1903.    The  examination 


268 

was  made  and  maps  showing  the  results  were 
sent  to  me  in  the  autumn  of  1903.   *   *   * 

"In  1903,  Mr.  E.  T.  Dumble  was  under  mv 
direction  and  control  and  I  may  say  in  a  gen- 
eral way  he  has  been  under  m^^  direction  the 
entire  time  he  has  been  with  the  company.  But 
in  1903  he  was  vmder  my  immediate  direction 
as  I  was  the  executive  officer  in  control  of  the 
oil  production  of  the  company  during  that  time 
(R.  3083-4). 

"The  Kern  Trading  &  Oil  Company  was 
formed  for  the  purpose  of  developing  oil  on 
lands  owned  by  the  railroad  company  and  also 
for  the  purpose  of  collecting  royalty  oil  on  some 
lands  that  at  that  time  had  been  leased  to  out- 
siders. In  addition  to  this  it  was  to  purchase 
oil  for  the  operation  of  the  railroad.  I  do  not 
know  at  whose  suggestion  the  company  was 
incorporated.  It  was  really  organized  as  a  fuel 
oil  development  and  purchasing  department  of 
the  Southern  Pacific  Company  (R.  3084). 

"As  I  have  said,  I  was  put  in  charge  of  the 
development  of  oil.  To  facilitate  this  develop- 
ment the  Kern  Trading  &  Oil  Company  was  in- 
corporated in  the  early  part  of  1903.  One  of 
the  first  questions  considered  was  what  land 
this  company  should  begin  operating  on  and 
also  what  land  should  be  reserved  from  sale. 
I  wanted  all  such  lands  turned  over  to  this  com- 
pany so  as  to  have  control  over  them  and  pre- 
vent their  sale.  We  had  had  trouble  some  years 
before  as  the  land  department  had  sold  ex- 
tremely valuable  oil  lands.  I  did  not  want 
that  repeated  and  I  wanted  the  lands  placed 
under  the  control  of  Mr.  Dumble  so  as  to  be 
positive  that  thev  could  not  be  sold.  This  led 
to  my  telling  him,  I  think  in  June,  1903,  to 
have  an  examination  made  of  lands  owned  by 


269 

the  companv,  so  that  we  coukl  take  them  off 
the  market  and,  as  far  as  their  sale  and  develop- 
ment was  concerned,  take  them  out  of  the  con- 
trol of  the  land  department. 

"It  was  mv  purpose  to  have  all  lands  that 
were  considered  to  be  either  actual  oil  lands, 
probable  oil  lands  or  possible  oil  lands,  turned 
over  to  the  Kern  Trading  &  Oil  Company  so 
that  it  could  control  them."    (R.  3085.) 

From  the  foregoing  it  appears  that  the  policy  of 
withdrawing  lands  from  sale  was  begun  during  the 
regime   of   Treadwell   and   was   renewed   and    con- 
tinued after  Dumble  succeeded  him.     From  all  of 
which  it  appears  that  Treadwell,  Dumble  and  Owen 
regarded  as  oil  lands  sections  further  removed  from 
proven  oil  territory  than  the  lands  in  suit,  thereby 
showing  that  in  1903  and  in  1901  appellants'  own 
geologists   were   by    their    acts    agreeing   with    the 
method   outlined   by   the   government   experts.   Dr. 
Branner  and  Mr.  Veatch,  for  determining  in  ad- 
vance of  development  whether  given  lands  are  oil 
lands   or   not.     It   will  be   noted,   too,   that,   while 
Mr.  Kruttschnitt  thought  Treadwell 's  reservations 
"entirely  too   broad",  he  and  Dmnble   and   Owen 
did  not  think  that  the  withdrawn  or  reserved  lands 
in   the    Elk    Hills   were    a    part    of    the    excessive 
breadth,     because,     when     Mr.     Kruttschnitt     told 
Dumble  to  "review  these  reservations"  of  Tread- 
Well,  Dumble  and  Owen  did  so,  but  did  not  take  the 
Elk  Hills  land  out  of  the  reservations. 


270 

Belief  of  Appellants  as  evidenced  by  the  construction  of  tne  railroad 
from  Bakersfield  to  McKittrick: 

It  is  not  necessary  to  argue  at  length  concerning 
this  matter.  The  testimony  of  H.  A.  Blodgett,  a 
disinterested  witness,  demonstrates  that  this  road 
was  built  for  the  purpose  of  tapping  the  oil  fields 
and  securing  the  vast  tonnage  which  their  develop- 
ment would  produce.  The  following  extracts  from 
his  testimony  are  in  point: 

"I  remember  when  the  Southern  Pacific  Rail- 
road Company  was  put  into  McKittrick.  I  had 
something  to  do  with  the  proposition  of  putting 
it  in  there.  The  inducement  that  promoted  the 
construction  of  the  road  was  the.  prospect  of  a 
profitable  traffic  that  was  to  come  out  of  the 
production  of  asphalt  and  oil  in  that  district. 
I  think  the  road  was  put  into  McKittrick  in 
1893.  At  that  time  I  was  operating  an  as- 
phaltum  business  in  the  vicinity  of  McKittrick. 
I  interested  the  Southern  Pacific  Railroad  Com- 
pany people  through  Henry  F.  Williams,  who 
was  at  that  time  residing  in  San  Francisco  but 
spent  much  time  in  Kern  and  who  was  selling 
town  lots  in  Kern  for  the  Pacific  Improvement 
Company.  I  knew  Mr.  Williams  to  be  on  very 
close  and  cordial  terms  with  the  railroad  people 
and  that  is  why  I  went  to  him.  I  took  the 
matter  up  with  the  railroad  authorities,  par- 
ticularly Mr.  A.  N.  Towne,  the  general  manager. 
I  had  a  number  of  interviews  with  Mr.  Towne 
and  visited  him  several  times  at  San  Francisco. 
I  helped  to  organize  the  Standard  Asphalt 
Company.  I  would  say  that  the  Standard 
Asphalt  Company  was  one  of  the  subsidiaries  of 
the  Southern  Pacific  Railroad  Company  as  it 
was  organized  to  acquire  property  that  was  to 
be  conveyed  in  consideration  of  the  building  of 
that  railroad.     The  first  officers  and  directors 


271 

of   tlie    Standard   Asphalt   Company,   I   think, 
were  Mr.   Towne,  Mr.  Dowtey,  Mr.  Wilhams 
Mr.  Jewett  and  myself,  I  think.     One  half  of 
the  stock  was  held  by  the  directors  of  the  Pacihc 
Improvement  Company.    One  half  of  the  stock 
of  the  Standard  Asphalt  Company  was  owned 
by  Mr.  Jewett  and  myself  and  the  other  halt 
bv  the  Pacific  Improvement  Company  represent- 
ing the   Sonthern  Pacific   Eailroad   Company. 
The   railroad  was  pnt   there   in   pursuance   of 
these  arrangements  about  the  organization  of 
the  Standard  Asphalt  Company  in  the  trans- 
ferring of  the  stock  and  has  been  operated  ever 
since.     The  right  of  way  from  Bakersfield  to 
McKittrick  was  obtained  by  Mr.  H.  Williams 
and  me.     It  was  largely  donated.     There  were 
a  number  of  odd  numbered  sections  which  had 
been  patented  to  the  Southern  Pacific  Railroad 
Company   crossed  by  this  road  from  Bakers- 
field  to  McKittrick   and   I   do   not   think   any 
right  was   specifically  obtained.     The   railroad 
owned  the  sections  and  there  was  no  necessity 
for  giving  them  what  they  already  had.     The 
interests  of  Jewett   and  Blodgett  were  trans- 
ferred to  the   Standard  Asphalt   Company   m 
accordance  with  the  agreement  for  the  building 
of   this    railroad.      At    that    tune    Jewett    and 
Blodgett  had  some  leases  of  oil  lands  in  the 
McKittrick  field  and  some  lands  in  fee  in  the 
Sunset  field,  all  of  which  were  conveyed  to  the 
Standard   Asphalt    Company   pursuant   to   the 
arrangement.     At  that  time  we  had  extensive 
lease-hold  interests  at  McKittrick  and  also  a 
great  deal  of  land  in  Sunset.     At  that  time  we 
had  shipped  several  hundred  tons  of  asphalt. 
Prior  to  that  time  it  was  a  paying  business.    We 
had  to  transport  a  long  distance  by  team  from 
Sunset  and  ^IcKittrick  to  Bakersfield  and  it 
was  very  expensive  but  we  had  delivered  a  good 
deal  of '  asphalt  and  we  were  satisfied  that  it 
would  be  a  paying  business  and  would  justify 


272 

the  construction  of  a  railroad  which  would 
furnish  transportation.  The  future  probabili- 
ties of  that  district  or  the  country  tributary  to 
the  Southern  Pacific  branch  into  McKittrick  as 
an  oil  producing  and  oil  shipping  community 
figured  largely  in  the  inducements  which  lead  to 
the  putting  of  the  road  in  there  at  that  time. 
The  portion  of  the  road  from  Lokern  to  Mc- 
Kittrick was  built  to  furnish  transportation  for 
the  production  of  oil  and  asphalt  from  that 
McKittrick  field.  The  probabilities  of  a  great 
production  of  oil  and  shipment  of  oil  in  the 
future  from  that  district  was  understood  by  the 
railroad  officials  as  an  inducement  to  get  them 
to  build  a  road  through  there  as  I  had  personally 
brought  that  matter  to  Mr.  Towne's  attention. 
I  told  Mr.  Towne  that  the  deposits  of  asphaltum 
in  evidence  in  that  district  was  a  drop  in  the 
bucket  only  to  the  quantity  of  oil  that  was 
tanlved  underneath  and  that  would  be  produced. 
In  other  w^ords,  the  visible  evidence  of  tonnage 
was  as  nothing,  practically,  compared  to  what 
was  underneath."    (R.  363-4-5.) 

The  testimony  of  Mr.  Blodgett  is  thoroughly  cor- 
roborated by  that  of  W.  E.  Youle  and  John  R. 
ScuiDham;  and  while  William  Hood,  the  engineer  of 
appellants  who  superintended  the  construction  of 
this  road,  stated  that  it  was  constructed  from 
Bakersfield  to  Lokern  primarily  to  develop  the  agri- 
cultural business  and  particularly  that  of  Miller  and 
Lux  and  that  the  continuation  of  the  road  from 
Lokern  to  McKittrick  was  for  the  purpose  of 
tapping  the  asphaltum  deposits  and  that,  as  far  as 
he  knew,  there  was  no  idea  of  oil  development  at 
that  time,  he  showed  very  plainly  that  his  acquaint- 
ance was  with  the  actual  facts  of  construction  rather 


273 

than  with  the  purposes  or  ends  which  it  was  in- 
tended to  subserve. 

The  suggestion  that  this  road  was  built  because  of 
the  opportunities  offered  by  the  agricultural  develop- 
ment of  the  country  through  which  it  ran  is,  to  say 
the  least,  naive  in  view  of  the  fact  that  the  region, 
as  heretofore  shown,  was  a  semi-arid  desert  in  which 
practically  the  only  enterprize  at  that  time  was  the 
operations  of  Miller  &  Lux  in  cattle  raising. 

Of  course,  it  is  not  asserted  that  the  construction 
of  this  road  evidences  the  belief  of  appellants  in 
the  oil  possibilities  of  an}^  particular  or  specific  part 
of  what  has  since  been  developed  as  the  oil  territory 
of  the  great  Midway  region,  but  that  it  is  convincing 
proof  of  the  belief  of  the  enterprising  men  who  were 
at  the  head  of  the  affairs  of  the  Southern  Pacific 
Company  in  the  future  development  of  the  region 
as  an  oil  producing  tributary  to  the  railroad.  If 
the  country  was  not  good  for  oil,  it  was  good  for 
nothing.  Colonel  C.  F.  Crocker,  a  director  of  the 
Southern  Pacific  Company  and  one  of  the  master 
minds  of  that  great  corporation,  remarked  to  Mr. 
Scupham,  when  the  latter  expressed  the  opinion  that 
"those  hills  south  of  Miller  &  Lux'  ranch  are  over- 
lying an  oil  deposit",  as  follows:  "Well,  it  is  a 
good  thing  that  there  is  some  value  of  that  kind  in 
that  land,  otherwise  it  would  be  a  very  poor  asset 
for  the  company."  (R.  588.) 


274 

Belief  as  shown  by  mineral  locations: 

In  the  volume  of  "Documents  and  Evidence  Not 
Printed ' '  there  is  a  memorandum  abstract  of  notices 
of  location  of  mining  claims  recorded  in  the  office 
of  the  County  Recorder  of  Kern  County,  California, 
covering  the  period  from  1899  to  1906  and  affecting 
or  relating  to  sections  in  township  30-23.  This 
memorandum  begins  at  page  600  and  extends  to  the 
end  of  the  volume  on  page  786.  No  digest  of  these 
locations  will  be  here  attempted.  The  attention  of 
the  Court  is  merelv  invited  to  their  number,  their 
continuity  and  the  names  and  character  of  the  large 
number  of  the  persons  who  participated  in  filing 
them.  It  was  suggested  below  by  counsel  for  appel- 
lants that  these  notices  meant  nothing  and  involved 
nothing  for  the  assigned  reason  that  they  were 
merely  the  result  of  the  excitement  attendant  upon 
the  discovery  of  oil  in  the  Kern  River  field  in  1899 
and  were  made  by  people  who  knew  nothing  of  the 
characteristics  of  oil  land  or  lacked  that  acquaint- 
ance with  surface  indications  and  structural  re- 
lationship necessary  to  the  proper  determination  of 
the  oil  character  of  land.  In  answer  to  this  sug- 
gestion it  seems  only  necessary  to  point  out  the 
identity  and  qualifications  of  a  large  number  of  men 
who  participated  in  filing  these  notices,  the  record 
cited  showing  that  a  great  number  of  the  locations 
were  repeated  year  after  year.  Among  those  who 
filed  the  notices  in  question  are: 

S.  G.  Drouilliard,  who  had  mined  and  prospected 
thirty  years  and  was  engaged  in  the  oil  business  from 


275 

1899  to  1904  and  was  intimately  acquainted  with  the 
Midway  and  McKittrick  regions  (R.  114)  ; 

C.  W.  Lamont,  who  had  mined  and  prospected 
since  1879  (R.  580) ; 

M.  S.  Wagy,  who  since  1898  had  been  developing 
oil  in  the  Kern  River  field  and  at  McKittrick  and 
Temblor  (R.  176)  ; 

H.  A.  Blodgett,  who  was  a  pioneer  in  the  Sunset, 
McKittrick  and  Midway  fields  and  was  at  the  time 
in  question  the  largest  operator  in  that  region,  hav- 
ing been  engaged  in  the  oil  business  for  twenty-three 
years  at  the  time  when  he  testified  (R.  360)  ; 

J.  I.  Wagy,  who  had  been  in  Kern  County  since 
November,  1893  (R.  237)  ; 

N.  C.  Farnum,  whose  principal  business  for  many 
years  had  been  connected  with  oil  lands  in  Kern 
County  (R.  493) ; 

W.  E.  Youle,  so  often  referred  to  as  the  principal 
oil  expert  in  the  McKittrick  region  and  w^hose  long 
history  of  connection  with  the  development  of  oil 
lands  is  set  out  in  the  record  at  pages  540-1-2-3-4 ; 

S.  Jewett,  the  senior  member  of  the  firm  of  Jew^ett 
&  Blodgett,  the  principal  operators  in  the  Mc- 
Kittrick and  Midway  country  at  the  time  in  ques- 
tion; 

A.  T.  Lightner,  appellants'  witness,  who  at  the 


276 

time  of  testifying  thought  nothing  good  of  the  Elk 
Hills,  but  in  1903  was  joining  with  others  in  locating 
lands  therein  for  oil  purposes  (R.  1977). 

Timonthv  Spellacy,  who  was  mentioned  by  appel- 
lants' witness  E.  J.  Miley  as  having  said  that  the 
^'fellows  in  the  flat  were  playing  pretty  much  of  a 
sucker  game"  (E.  1723)  ;  but  who  had  on  September 
16,  1903,  located  sections  14,  15  and  16  and  in  1905 
liked  the  Elk  Hills  so  well  and  had  such  faith  in 
their  oil  character  that  he  went  out  and  re-located 
section  16  and  actually  located  section  27,  one  of  the 
sections  here  in  suit,  on  February  12,  1903; 

H.  W.  Thomas,  another  of  appellants'  witnesses, 
who  testified  to  his  long  connection  with  and  inti- 
mate knowledge  of  oil  lands  and  oil  development 
(E.  1828)  ; 

Charles  A.  Brisco,  who  went  to  McKittrick  in 
1897  and  knew  all  about  the  countr}^,  having  been  a 
driller  and  prospector  (E.  335)  ; 

H.  P.  Dover,  who  was  interested  in  oil  locations 
in  the  Midway  and  in  the  Elk  Hills  (E.  463)  ; 

C.  H.  Allison,  another  of  appellants'  witnesses, 
who  stated  that  he  was  familiar  with  all  of  the  oil 
development  that  had  been  carried  on  in  the  west 
side  fields  (E.  1999) ; 

D.  B.  Hoy,  who  was  interested  with  F.  D.  Lowe 
in  drilling  in  1900  the  well  on  section  11  of  31-24  in 


277 

the  Elk  Hills  in  which  gas  was  encountered  at  500 
feet  and  a  small  showing  of  oil  (E.  146-7)  ; 

C.  H.  Meves,  another  of  appellants'  witnesses,  who 
was  agent  for  the  Southern  Pacific  Eailroad  Com- 
pany at  Buttonwillow  near  the  Elk  Hills  from  1893 
to  1905   (R.  2003)  ; 

C.  A.  Barlow,  maker  of  the  Barlow  &  Hill  maps, 
a  member  of  Congress,  engaged  in  the  oil  business 
and  mining  business  and  a  witness  for  appellants 
(R.  2006)  ; 

W.  H.  Hill,  the  other  member  of  the  firm  of 
Barlow  &  Hill,  map  makers,  who  knew  all  about 
the  oil  conditions  in  the  region  in  question  (R.  109)  ; 

W.  G.  Sylvester,  who  made  examinations  of  the 
surface  indications  and  whose  party  ran  a  foot  race 
with  Jeff  Packard  and  his  party  to  see  which  side 
would  get  in  first  (R.  356)  ; 

D.  Burkhalter,  division  superintendent  of  the 
Southern  Pacific  Company  at  Bakersfield  (R.  3429)  ; 

John  Jean,  who  located  on  the  strength  of  the 
advice  of  J.  B.  Treadwell  and  L.  G.  Sarnow 
(R.  128) ; 

L.  G.  Sarnow,  who  was  emplo3^ed  by  the  Southern 
Pacific  Railroad  Companj^  and  had  charge  of  its 
drilling  and  operations  in  the  McKittrick  field 
and  who  had  had  large  experience  in  oil  matters 
(R.  133); 


278 

F.  J.  Sarnow,  a  brother  of  L.  G.  Sarnow  and  him- 
self an  experienced  oil  man  (R.  164)  ; 

And  last,  but  not  least,  J.  B.  Treadwell,  appel- 
lants' oil  expert  and  in  charge  of  all  of  its  oil 
development  and  operations  in  1899  and  several  suc- 
ceeding years,  already  manj^  times  herein  referred  to. 

The  wide  experience  in  oil  matters  of  the  persons 
above  mentioned  affords  most  emphatic  answer  to 
the  contention  of  appellants  that  the  locations  in 
the  Elk  Hills  were  made  only  by  "tenderfeet"  and 
men  who  by  reason  of  the  excitement  caused  by  the 
discovery  of  oil  in  the  Kern  Eiver  field  in  1899  were 
attempting  to  secure  lands  for  oil  purposes  where- 
ever  they  might  be  situated  and  whatever  their  con- 
dition. The  memorandum  of  these  locations  covers 
185  pages  and  the  names  of  Drouillard,  Blodgett, 
Youle,  Jewett  and  Spellacy  and  others  of  the  most 
prominent  oil  men  in  the  California  fields  appear  not 
once  nor  twice,  but  many  times,  showing  that  they 
located  many  quarter  sections  and  re-located  them 
for  a  period  of  several  years.  E.  J.  Miley,  one  of 
appellants'  witnesses  most  relied  upon  and  who  was 
most  unsparing  in  his  condemnation  of  the  Elk 
Hills,  is  the  gentleman  to  whom  the  witness  L.  D. 
Bell  referred  when  he  stated  that  he  "heard  that 
Miley  was  located  all  over  the  Elk  Hills"  (E.  1805) ; 
and  Bell  Avas  a  witness  for  appellants  (R,  1802). 

Appellants  say  that  the  fact  that,  with  the  ex- 
ception of  the  Lowe  well  on  section  11  of  township 
31-24  which  encountered  gas  and  a  small  amount  of 


279 

oil  at  a  depth  of  560  feet,  there  was  no  develop- 
ment in  the  Elk  Hills  proves  that  many  mineral 
locations  made  there  were  not  hona  fide.  The  answer 
to  this  contention  is  that  the  record  shows  that  the 
failure  to  develop  the  locations  between  the  period 
from  1899  to  1904,  when  the  patent  was  issued,  was 
due  to  four  causes: 

1.  The  suspension  of  the  lands  from  all 
forms  of  acquisition  by  the  govermnental  order 
of  February  28,  1900,'  of  which  somewhat  has 
already  been  said  in  this  brief; 

2.  The  low  price  of  oil; 

3.  The  lack  of  transportation  facilities;  and 

4.  Lack  of  funds  on  the  part  of  the  locators. 

H.  A.  Blodgett  was  certainly  not  biased  in  behalf 
of  the  government.     As  already  indicated,  he  was 
the  most  prominent  and  experienced  oil  man  around 
McKittrick  in  1900.    He  had  large  interests  in  the 
region  round  about.     He  promoted  the  building  of 
the   railroad   from   Bakersfield   to   McKittrick  and 
made  a  gift  of  the  right  of  way.     He  it  was  who 
brought  W.  E.  Youle  into  the  field,  the  most  ex- 
perienced oil  expert  of  that  day,  who  did  more  for 
the   development   of  the   oil   resources  of   the   San 
Joaquin  valley  than  any  other  man.     Mr.  Blodgett 
testified  that  there  was  a  considerable  oil  boom  in 
Kern  County  in  1899  and  1900  which  kept  up  for 
three  vears  or  more  and  was  shared  in  by  geologists 
and  competent  men  of  experience  in  oil  matters; 
but  that  the  low  price  of  oil  made  it  unprofitable  to 
produce  oil  under  any  circumstances  and  that  that 


280 

fact  was  tlie  reason  for  the  end  of  the  excitement, 
the  lack  of  cars  for  transportation  having  also  con- 
siderable to  do  with  it,  the  two  factors,  the  low  price 
of  oil  and  lack  of  transportation  facilities,  making 
the  marketing  of  oil  practically  prohibitive.  Oil 
could  not  be  produced  profitably  and  investors  lost 
interest.  That  condition  paralyzed  the  region  and 
development  ceased.  The  Associated  Oil  Company 
w^as  the  only  concern  that  could  secure  trans- 
portation and  it  was  furnishing  oil  to  the  Southern 
Pacific  Company  (E.  366,  370). 

Formerly  the  Southern  Pacific  Eailroad  Company 
bought  oil  from  all  producers  in  all  of  the  fields  in 
Kern  County,  but  later  only  from  the  Associated 
Oil  Company  (R.  370).  The  oil  boom  which  began 
in  1900  ended  in  the  summer  of  1902  (P.  383).  Many 
competent  oil  men  came  in  during  the  excitement 
(P.  384).  It  w^as  his  intention  to  develop  from  lo- 
cations in  the  Elk  Hills,  but  during  the  period  from 
1902  to  1905  or  1906  the  conditions  of  the  oil  busi- 
ness were  such  that  it  would  have  been  ridiculous 
to  spend  any  money.  He  retained  possession,  but 
did  no  development  work  (P.  389).  His  reasons  for 
not  developing  the  property  in  the  Elk  Hills  was 
that  there  was  no  market  for  oil.  The  following 
are  his  own  words: 

"The  price  was  so  low  that,  if  you  had  had  a 
thousand  barrels  a  day  in  the  Elk  Hills,  you 
could  not  have  transported  it — it  wouldn't  be 
worth  a  cent."  (P.  390.) 

The  reason  he  did  no  drilling  in  the  Elk  Hills  w^as 


281 

that  oil  had  no  value  (R.  391).    "The  only  develop- 
ment we  did  was  right  alongside  of  the  railroad 
track.     That  would  give  it  a  little  more  value— not 
niuch— than  if  it  was  in  the  Elk  Hills,  under  the 
conditions  that  existed— that  is,  a  little  more  value 
under  the  conditions  that  existed  at  the  time  you 
mention,  1902-1903,  than  if  it  was  in  the  Elk  Hills, 
but  it  did  have  a  little  percentage."  (R.  392).    This 
was  true  although  he  regarded  the  property  in  the 
Elk  Hills  as  more  valuable  than  any  land  lying  west 
of  the  track  or  the  outcrop  (R.  392).    The  only  rea- 
son for  developing  the  property  lying  nearer  the 
ridge  instead  of  that  in  the  Elk  Hills  was  that  it  was 
right  beside  the  railroad.     The  distance  of  the  Elk 
Hills  from  the  outcrop  had  no  influence  in  causing 
him  to  refrain  from  doing  development  work   (R. 
394).    The  depression  in  the  price  of  oil  existed  all 
along  the  Pacific  Coast  (R.  395).     He  thought  that 
the  shortage  of  cars  was  not  simply  one  symptom  of 
a  very  general  condition  of  lack  of  ability  to  handle 
increased  production,  but  that  it  was  a  symptom  of 
a  desire  on  the  part  of  the  railroad  company  not  to 
furnish  the  facilities  (R.  396).    It  was  true  that  at 
that  time  the  purchase  of  tank  cars  increased  quite 
rapidly,  but  there  was  only  one  company,  the  Asso- 
ciated Oil  Company  (a  subsidiary  of  the  Southern 
Pacific  Company),  which  could  obtain  cars  (R.  397). 
He  was  told  by  the  railroad  company  that  more  cars 
were  coming  and  that  he  could  secure  some,  but, 
when  they  came,  the  letters  "S.  P."  on  them  were 
painted  out  and  "A.  O."  put  on  instead  (R.  398-9). 
No  one  except  the  Associated  Oil  Company  was  able 


282 

to  deliver  oil  with  any  certainty  (E.  401).  When 
the  railroad  was  asked  for  cars,  its  agent  simply 
asserted  that  they  didn't  have  the  cars  (R.  402). 

S.  G.  Drouillard  testified  that  his  abandonment  of 
the  Elk  Hills  was  due  to  the  order  of  withdrawal 
(R.  125). 

John  Jean  stated  that  it  was  not  possible  to  get 
people  interested  in  the  oil  business  and  that  his 
attempts  to  borrow  money  with  which  to  do  work 
proved  failures,  even  though  the  Elk  Hills  were 
promising  oil  territory.  He  gave  up  his  expecta- 
tions on  account  of  lack  of  finances  (R.  130-1). 

L.  G.  Sarnow  abandoned  his  locations  because  oil 
went  down  to  nothing.     (R.  142). 

F.  D.  Lowe  held  to  his  opinion  that  there  is  oil  in 
the  Elk  Hills  and  that  it  is  good  oil  country;  but  the 
depression  in  the  price  of  oil  continued  for  a  long 
time  after  1901  (R.  151). 

B.  K.  Lee  stated  that  he  drilled  a  well  into  the  oil 
sand  about  the  time  the  slump  came  in  the  price  of 
oil  in  1901  and  that  from  then  on  until  the  winter 
of  1903  things  were  very  quiet,  the  price  of  oil  not 
justifying  the  expense  of  putting  in  a  pipe-line  (R. 
231). 

J.  I.  Wagy,  although  four  or  five  thousand  dollars 
had  been  spent  in  township  30-23,  was  deterred  by 
the  withdrawal  from  further  effort  to  develop  (R. 
251-3-5). 


283 

S.  P.  Wible  testified  that  locations  in  1900  and 
1901  were  made  by  parties  other  than  those  who  were 
merely  speculating  and  most  of  the  operations  were 
carried  on  under  advice  of  a  geologist,  of  whom  he 
considered  Josiah  Owen  the  best  in  the  field,  and 
that  all  of  his  locations  were  made  under  the  advice 
of  competent  men.  referring  to  Treadwell  and  Youle. 
From  1903  to  1908  the  oil  business  in  the  McKittrick 
vicinity  was  very  dull  and  there  was  practically  no 
new  development  on  account  of  the  price  of  oil  and 
lack  of  facilities  for  getting  rid  of  it.  It  was  only 
once  in  a  while  you  could  get  cars  and  for  that  rea- 
son you  could  not  contract  for  the  oil.  The  activity 
stopped  almost  entirely.  In  1903  oil  sold  at  eleven 
cents  a  barrel  (R.  332-3-4). 

Charles  Brisco  testified  that  there  was  a  depression 
in  the  oil  business  in  McKittrick  in  1901,  2,  3,  and  4, 
the  cause  being  inability  to  sell  because  of  lack  of 
facilities  for  transportation.  He  would  order  cars, 
but  he  could  not  get  them.  He  was  actively  en- 
gaged in  prospecting  and  developing  (R.  338-9). 

W.  G.  Sylvester  was  prevented  from  developing 
his  property  in  the  Elk  Hills  because  of  the  low 
price  of  oil.  He  believed  those  lands  to  be  oil  lands 
susceptible  of  development  and  production  on  a 
commercial  basis.  In  1901  he  drilled  980  feet  in 
section  8  of  30-23  (in  the  Elk  Hills),  but  abandoned 
it  because  there  was  so  much  gas  that  the  drilling 
became  so  expensive  that  he  could  not  stand  the 
pressure  and  had  to  quit  (R.  357-8). 


284 

C.  F.  Whittier,  an  oil  man  of  large  experience, 
intended  to  do  development  work  in  the  Elk  Hills, 
but  suffered  an  accident  which  made  it  impossible 
(R.  471-2).  He  regarded  the  oil  character  of  the 
Elk  Hills  strong  enough  to  warrant  the  expenditure 
of  money  in  an  attempt  to  prove  its  possibilities  as 
early  as  1904  and  was  making  arrangements  at  that 
time  to  get  money  in  order  to  locate  there  and  do 
assessment  w^ork;  but  an  injury  to  his  knee  kept 
him  confined  to  the  house  several  years  and  so  pre- 
vented him  (R.  474). 

H.  P.  Dover  abandoned  his  locations  because  of 
the  slump  in  the  oil  business  in  Kern  Countv  where- 
by  oil  became  a  drug  on  the  market  for  two  or  three 
years  and  no  one  would  put  money  in  oil  property 
(R.  467). 

N.  C.  Farnum  and  his  associates  spent  and  paid 
out  quite  a  sum  of  money  for  and  on  their  loca- 
tions which  they  kept  up  until  1906,  building  roads 
through  the  country,  doing  assesment  work,  build- 
ing a  camp  and  maintaining  at  least  one  man  there, 
sometimes  as  high  as  a  dozen.  They  built  a  camp 
consisting  of  a  one-room  house  and  a  stable  about 
the  same  size,  hauling  water  into  the  hills  for  the 
animals  and  men  and  all  of  their  feed  and  pro- 
visions. They  were  about  to  move  a  rig  over  from 
Kern  River  into  the  Elk  Hills  to  prepare  for  drill- 
ing, but  were  prevented  by  the  action  of  the  govern- 
ment in  withdrawing  the  land  (R.  501-2-3).  In  1902 
there  was  a  depression  in  oil  and  a  great  shortage  of 


285 


cars.  The  lack  of  railroad  transportation  facilities 
had  something  to  do  with  the  general  depression  of 
the  oil  business  (R.  504). 

W.  E.  Youle  attributed  failure  of  development  in 
the  Elk  Hills  to  a  lack  of  water,  low  price  of  oil  and 
financial  embarrassment  (R.  569).  He  said  that 
money  was  spent  on  the  locations  made  on  his  recom- 
mendations in  the  Elk  Hills,  roads  being  built  and 
assesment  work  done ;  but  money  was  scarce  and  oil 
was  cheap  and  transportation  hard  to  get  (R.  576). 

C.  W.  Lamont  held  two  sections  for  ten  years,  but 
didn't  do  any  assesment  work  on  them  because  he 
was  "broke"— not  because  he  didn't  consider  them 
worth  sufficient  attention.  There  was  an  oil  depres- 
sion in  1901  lasting  for  several  years  and  it  was 
"just  as  good  as  insulting  anybody  to  ask  them  to  put 
their  money  into  it  at  that  time".  That  was  the  whole 

reason  for  our  failure  to  try  to  influence  people 

there  or  get  money  to  carry  out  the  locations"  (R. 

583). 

John  R.  Scupham  testified  that  the  Buena  Vista 

Company  did  not  prove  a  success  on  account  of  lack 

of  transportation  (R.  603). 

Robert  E.  Graham,  a  witness  for  appellants,  tes- 
tified that  in  1901  oil  was  sold  in  the  field  for  $1.00 
a  barrel  to  other  rigs.  None  of  it  was  hauled  out. 
As  soon  as  drilling  was  suspended,  there  was  no  sale 
for  oil  and  drilling  was  suspended  because  the  oil 
fell  off  to  12  and  15  cents  a  barrel  about  1903  or  1904 
(R.  2137). 


286 

O.  E.  Hotchkiss.  another  of  appellants'  witnesses, 
testified  as  follows:  "I  went  to  Bakersfield  prior  to 
m}^  trip  to  MeKittrick  on  that  occasion  (1900). 
Bakersfield  was  a  central  town  for  the  various  dis- 
tricts in  which  the  oil  excitement  then  existed.  The 
town  was  very  much  congested  with  oil  men,  locators 
and  speculators.  The  hotels  were  so  crowded  it  was 
ver)'  difficult  to  get  rooms  at  all  and  in  the  evenings 
one  would  have  to  elbow  his  w^ay  in  the  lobby,  as  it 
was  fairly  packed.  This  excitement  continued  up 
to  the  time  of  the  discovery  of  oil  in  the  Beaumont 
district  in  Texas.  This  drew  a  great  many  people 
from  Kern  county  and  the  excitement  died  down 
along  in  1902  or  1903.  After  that  excitement  died 
down  everything  was  Yery  flat  there  for  some  years. 
Oil  went  down  to  12  and  14  cents  a  barrel  and  there 
was  hardly  any  profit  in  producing  oil  even  if  you 
had  a  well  already  drilled"  (R.  2091-2). 

C.  H.  Meves,  another  of  appellants'  witnesses,  was^ 
interested  in  numerous  locations  in  the  Elk  Hills, 
but  after  the  drop  in  the  price  of  oil  at  MeKittrick 
lost  interest  in  them.  He  did  not  think  enough  of 
the  land  to  want  to  put  any  money  in  it  as  no  com- 
panies were  coming  down  that  way  to  prospect  the 
land  so  that  he  could  get  a  line  on  what  was  in  it  (R. 
206). 

E.  J.  Miley,  another  of  appellants'  witnesses,  shut 
down  drilling  in  19  of  30-22  in  1903  because  he  had 
not  gotten  enough  production  to  warrant  operation 
at  the  then  price  of  oil  (R.  1710).     He  drilled  in 


287 


section  10  of  30-21  about  1500  feet ;  but,  getting  no 
oil,  moved  over  to  section  11  of  the  same  township 
and  there  got  some  oil ;  but  the  money  ran  out  and 
the  oil  business  was  bad  and  he  had  to  quit  and 
abandon  his  location  in  1901  (R.  1710-11). 

S.  J.  Dunlop,  another  of  appellants'  witnesses,  in 
1900  promoted  the  Mount  Diablo  Oil  Company  and 
commenced  the  actual  development  of  section  26  of 
32-23,  putting  a  well  in  each  quarter  and  making  a 
discovery  and  obtaining  patents  from  the  govern- 
ment. After  that  there  was  quite  a  slump  in  the  oil 
business  and  he  let  the  property  lie  until  a  railroad 
should  be  built  in  there  and  there  was  further  de- 
velopment (R.  1820). 

L.  B.  McMurtry,  who  had  been  a  railroad  con- 
ductor on  the  Southern  Pacific  and  testified  for  ap- 
pellants, remembered  that  in  1901  oil  was  do^\m  to 
fifteen  cents  a  barrel  and  there  was  no  market  and 
no  transportation  and  the  oil  industry  seemed  falling 
off  considerably  at  that  time  (E.  2082). 

Even  F.  M.  Anderson,  appellants'  chief  expert  and 
their  geologist  around  McKittrick  in  1903,  admitted 
that  the  price  of  oil  in  1903  and  1904  in  the  vicinity 
of  McKittrick  was  from  15  to  25  cents  a  barrel. 

L.  J.  King,  superintendent  of  the  Associated  Oil 
Company,  a  subsidiary  of  the  Southern  Pacific  Com- 
pany, testified  in  the  Land  Office  contest  at  Visaha 
that  cessation  of  drilling  in  the  majority  of  cases 
in  the  Elk  Hills  was  due  to  lack  of  money  and  ma- 


288 

chineiy  and  not  because  the  land  was  not  considered 
valuable  for  oil,  and  that  this  was  true  in  some 
cases  as  to  the  Associated  Oil  Company,  but  that  its 
cessation  w^as  only  temporary  (R.  See  Ex  9-B  to  O). 

In  the  same  proceeding  W.  A.  Williams,  geologist 
for  the  Associated  Oil  Company,  testifying  that  the 
lands  in  the  Elk  Hills  are  more  valuable  for  oil 
than  for  any  other  purpose,  explained  why  several  of 
the  wells  drilled  about  1910  failed,  some  because 
they  did  not  continue  to  drill  long  enough,  others 
because  they  were  unfavorably  located  and  yet  others 
on  account  of  water  troubles  (Ex.  9-E;  9-M). 

SUMMARY  OF  KNOWN  CONDITIONS. 

Summarizing,  these  were  in  outline  the  outstand- 
ing known  conditions :  to  the  west  of  and  as  near  as 
two  miles  to  the  lands  in  suit  a  long  line  of  outcrop 
of  oil  sands  whose  conmiercial  productivity  had 
been  proven  by  two  hundred  and  eighty-one  oil 
wells — the  dip  of  the  strata  in  which  the  outcrop  and 
wells  are  towards  the  lands  in  suit — the  existence  in 
the  midst  of  and  near  to  the  lands  in  suit  of  evi- 
dences of  oil,  consisting  of  seepages,  asphalt  and  gas 
blowouts — the  existence  of  an  oil  field  to  the  east  of 
the  lands  in  suit,  distant,  to  be  sure,  twenty-eight 
miles  but  underlaid  by  the  same  sand  found  in  the 
McKittrick  hokl  to  the  west — the  conspicuously  ideal 
anticlinal  stru(-ture  of  the  lands  in  suit. 

These  are  the  conditions  which  were  actually 
known  to  appellants;  these  are  the  conditions  which 


289 

led  Dr.  Branner,  one  of  tlie  greatest  oil  geologists  of 
the  world,  to  exclaim  that  ''a  geologist  who  was  ac- 
quainted with  them  and  failed  to  form  an  opinion 
that  the  Elk  Hills  were  oil  in  character  and  that  there 
was  an  oil  bearing  zone  beneath  those  hills  did  not 
know  his  business";  these  are  the  known  conditions 
which  the  goverimient  with  great  confidence  con- 
tends were  plainly  such  as  to  engender  in  1904  the 
belief  that  the  lands  in  suit  were  mineral  lands  and 
therefore  not  properly  patentable  to  the  Southern 
Pacific  Railroad  Company  under  the  grant  of  1866; 
these  are  the  conditions  which  did  engender  that 
belief  in  appellants  and,  as  the  result  of  that  belief, 
such  a  desire  to  have  and  secure  these  lands  that  they 
were  willing,  in  order  to  do  so,  to  falsely  represent 
them  to  be  agricultural  in  character  and  commit  a 
fraud  involving  moral  turpitude  in  order  to  acquire 
them. 

* 

LEGAL  EFFECT  OF  THE  FOREGOING. 

The  government  confidently  asserts  that  the  legal 
effect  of  the  facts  established  by  the  evidence  re- 
cited concerning  the  known  conditions,  taken  in  con- 
nection with  the  non-mineral  affidavits  offered  by  ap- 
pellants in  connection  with  selection  list  No.  89,  is 
such  as  to  entitle  it,  without  further  showing,  to  a 
decree  annulling  the  assailed  patent  and,  of  course, 
to  an  affirmance  of  the  challenged  decree;  and  that 
such  a  decree  would  be  the  result  of  the  application 
to  these  facts  of  the  elementary  and  fundamental 
equitable  principle  formulated  for  the  purpose  of 


290 

remeclyiug  the  effects  of  fraud  practiced  in  securing 
the  execution  of  instruments.     One  of  the  essential 
averments  in  the  affidavits  in  question  is  admittedly 
false;  for  Mr.  Eberlein  testified  that  he  had  made  no 
examination   of  the  lands   in  suit   and   George  A. 
Stone,  upon  whose  knowledge  of  the  lands  Eberlein 
said  that  he  relied,  testified  that  he  had  made  no  ex- 
amination of  them  for  the  purpose  of  selecting  them 
and  that  such  knowledge  as  he  had  was  general  in 
character  from  his  general  knowledge  of  the  country 
(R.  1029).     Furthermore,  Eberlein  testified  that  he 
sent  no  one  to  make  an  examination  of  the  lands 
(R.  1137).     Therefore,  the  statement  that  he  had 
caused  the  lands  to  be  carefully  examined  by  em- 
ployees  of   the   railroad   company   was   manifestly 
false  and,  taken  in  connection  with  the  continued 
protests  which  he  said  he  made  from  1903  to  1908 
against   examinations   of   unpatented   lands   by   oil 
experts  of  the  Southern  Pacific  Railroad  Company 
on  the  ground  that  what  they  might  discover  might 
prevent  the  issuance  of  patents,  makes  the  material- 
ty  of  the  falsity  of  the  avennent  in  question  con- 
spicuous.    As  a  matter  of  fact,  it  will  be   shown 
hereafter  by  positive  and  documentary  evidence  pro- 
duced under  subpoena  duces  tecum   that  Eberlein 
and  his  superiors  believed  in  the  mineral  character 
of  the  lands  in  suit  and  went  to  great  lengths  to  se- 
cure patent  thereto  for  that  reason;  but,  even  if  it 
were  assumed  that  Eberlein 's  conduct  and  statements 
were  due  to  ignorance,  the  legal  result  would  be  the 
same.     This,  of  course,  does  not  refer  to  the  par- 
ticular statement  mentioned  above,  the   falsitv   of 


291 

which  could  not  have  been  unknown  to  Eberlein,  but 
only  to  that  part  of  the  affidavits  in  which  he  repre- 
sented the  lands  in  suit  to  be  agricultural  lands  and 
of  the  character  contemplated  by  the  grant. 

In  Prewitt  vs.  TrimUe,  92  Ky.  176,  181 ;  36  Am. 
St.  586,  Biglow  on  Fraud  is  thus  cited : 

"For  it  is  elemenatr}^  doctrine  that  a  false 
representation  ma}^  in  contemplation  of  law, 
be  made  with  knowledge  of  its  falsity,  that  is, 
made  scienter  so  as  to  afford  a  right  of  action  in 
damages,  and  a  fortiori,  ground  for  equitable 
proceedings  (1)  without  actual  knowledge  of 
either  its  truth  or  falsity,  as  when  the  party  has 
affirmed  his  knowledge  by  a  positive  statement 
which  implies  knowledge;  (2)  when  made  under 
circumstances  in  which  the  party  ought  to  have 
known,  if  he  did  not  know,  of  its  falsit.y;  as 
when  having  'special  means  of  knowledge'  it  is 
his  duty  to  know.    Biglow  on  Fraud,  599,  615." 

The  rule  is  thus  laid  down  b}^  Kerr: 

"If  a  man  makes  a  representation  as  of  his 
own  knowledge,  not  knowing  whether  it  be  true 
or  false,  and  it  is  in  fact  untrue,  he  is  guilty  of 
fraud,  as  much  as  if  he  knew  it  to  be  untrue.  It 
is  in  law  a  willful  falsehood  for  a  man  to  assert 
as  of  his  own  knowledge  a  matter  of  which  he  has 
no  knowledge.  It  is  wrong  to  state  as  true  what 
the  person  making  such  statement  does  not  know 
to  be  true,  even  though  he  does  not  know  it  to  be 
false,  but  believes  without  sufficient  grounds 
that  the  statement  will  ultimately  turn  out  to  be 
correct, ' ' 


292 

Kerr  on  Fraud  and  Mistake,  53,  54  (Am.  Notes 
by  Bump).    See  also : 

Ainslie  vs.  Medlycott,  6  Ves.  13, 

Smool  vs.  Wbertj,  10  M.  &  W.  10, 

Bennett  vs.  Judson,  21  N.  Y.  238, 

Harding  vs  Randall,  15  Me.  332,  335. 

Continuing,  the  same  author  says : 

"  If  a  man  says  what  is  false  within  his  knowl- 
edge or  what  he  has  no  reasonable  ground  for 
believing  to  be  true  and  makes  the  reiDresenta- 
tion  with  the  view  to  induce  another  to  act  upon 
it,  who  does  so  accordingly  to  his  prejudice,  the 
law  imputes  to  him  a  fraudulent  intent,  al- 
though he  may  not  have  been  in  fact  instigated 
by  a  morally  bad  motive."    Idem  55,  56. 

Mr.  Pomeroy^  in  his  Equity  Jurisprudence,  Sec. 
885,  savs: 

"It  is  fuUv  settled  by  the  ablest  courts,  Eng- 
lish and  American,  that  there  mav  be  actual 
fraud — not  merely  constructive  fraud — in 
equity  without  any  feature  or  incident  of  moral 
culpability;  that  the  actual  fraud  consisting  of 
misrepresention  is  not  necessarih^  immoral.  A 
person  making  an  untrue  statement  without 
knowing  or  believing  it  to  be  untrue  and  without 
any  intent  to  deceive  may  be  chargeable  with 
actual  fraud  in  equity.  Whatever  would  be 
fraudulent  at  law  will  be  so  in  equity;  but  the 
equitable  doctrine  goes  fartehr  and  includes  in- 
stances of  fraudulent  representations  which  do 
not  exist  in  the  law." 


293 
Continuing,  the  same  author  says : 

"Where  a  person  makes  an  untrue  statement 
and  has  at  the  time  no  knowledge  of  its  truth 
and  there  are  no  reasonable  grounds  for  his  be- 
lieving it  to  be  true,  he  is  chargeable  with  fraud, 
although  he  had  no  absolute  knowledge  of  its  un- 
truth and  mav  claim  to  have  had  a  belief  in  its 
truth.    This  is  the  mode  in  which  the  rule  is  ordi- 
narily laid  down  by  courts  of  law  and  sometimes 
by  courts  of  equity.  The  equity  cases  have,  how- 
ever, settled  the  rule  in  somewhat  broader  terms, 
omitting  entirely  the  qualification  'that  there  are 
no  reasonable  grounds'  for  the  person's  believ- 
ing his  statement  to  be  true.    In  other  words,  it 
is  settled  in  equity  by  an  overwhelming  weight  of 
authority  that,  where  a  person  makes  a  state- 
ment of  fact  which  is  actually  untrue  and  he  has 
at  the  time  no  knowledge  whatever  of  the  matter 
he  is  chargeable  with  fraud  and  his  claim  to 
have  believed  in  the  truth  of  his  statement  can- 
not be  regarded  as  at  all  material.    The  definite 
assertion   of   something  which   is   untrue,   con- 
cerning which  the  party  has  no  knowledge  at  all, 
is  tantamount  in  its  effects  to  the  assertion  of 
something  which  the  party  knows  to  be  untrue" 
Idem,  section  887. 

"Where  a  person  makes  a  statement  of  fact 
which  is  untrue,  but  at  the  time  of  making  it  he 
honestly  believed  it  to  be  true  and  this  belief  is 
based  upon  reasonable  grounds  which  actually 
exist,  the  misrepresentation  so  made  is  not 
fraudulent  either  in  equity  or  at  law.  This  gen- 
eral proposition  is  subject,  however,  to  the  fol- 
lowing  important    limitations : • 5. 

Where  such  an  untrue  statement  is  made  in  the 
honest  belief  of  its  truth,  so  that  it  is  the  result 
of  an  innocent  error,  and  the  truth  is  after- 
wards discovered  by  the  person  who  has  inno- 
cently made  the  incorrect  representation,  if  he 


294 

then  siijffers  the  other  party  to  continue  in  error 
and  to  act  on  the  belief  that  no  mistake  has  been 
made,  this,  from  the  time  of  discovery,  becomes 
in  equity  a  fraudulent  representation,  even 
though  it  was  not  so  originally.  6.  Finally,  if  a 
statement  of  fact,  actually  untrue,  is  made  by  a 
person  who  honestly  believes  it  to  be  true,  but 
under  such  circumstances  that  the  duty  of  know- 
ing the  truth  rests  upon  him,  which,  if  fulfilled, 
w^ould  have  prevented  him  from  making  the 
statement,  such  misrepresentation  may  be  fraud- 
ulent in  equity  and  the  person  answerable  as  for 
fraud ;  f orgeti'ulness,  ignorance,  mistake,  cannot 
avail  to  overcome  the  pre-existing  duty  of  know- 
ing and  telling  the  truth"    Idem.,  section  888. 

This  doctrine  has  been  adopted  by  the  Supreme 

Court  of  the  United  States  which  says : 

"Whether  the  party  thus  misrepresenting  a 
fact  knew  it  to  be  false  or  made  the  assertion 
without  knowing  whether  it  were  true  or  false 
is  wholly  immaterial,  for  the  affirmation  of  what 
one  does  not  know  or  believe  to  be  true  is 
equallv,  in  morals  and  law,  as  unjustifiable  as 
the  affirmation  of  what  is  known  to  be  positively 
false.  And  even  if  the  party  innocently  mis- 
represents a  fact  by  mistake,  it  is  equally  con- 
clusive ;  for  it  operates  as  a  surprise  and  impo- 
sition of  the  other  party.  Or,  as  Lord  Thurlow 
expresses  it  in  Nevill  vs.  Wilkin  son,  'It  mis- 
leads the  parties  contracting  on  the  subject  of 
the  contract'."  Smith  vs.  Richards,  13  Pet.  25, 
36 ;  10  L.  Ed.  42. 

And  even  in  an  action   at   law   the   same   court 

has  approved  even  stronger  language,  for  in  Lehigh 

Zinc  &  Iron  Co.  vs.  Bam  ford,  150  U.  S.  665,  673, 

it  approved  the  fohowing  instructions: 

"A  person  who  makes  representations  of  ma- 
terial facts,   assuming  or  intending  to  convey 


295 


the  impression  that  he  has  actual  knowledge  of 
such  facts,  when  he  is  conscious  that  he  has  no 
such  knowledge,  is  as  much  responsible  for  the 
injurious  consequences  of  such  representations 
to'  one  who  believes  and  acts  upon  them  as  if  he 
had  actual  knowledge  of  their  falsity." 


Eberlein,  by  resolution  of  the  board  of  directors 
of  the  Southern  Pacific  Railroad  Company  of  Sep- 
tember 2,  1903,  was  given  full  power  to  manage,  con- 
duct and  carry  on  the  business  of  the  land  office  of 

that  company and  he  was  thereby  fully 

authorized  and  empowered  to  represent  that  com- 
pany in  the  United  States  Land  Offices  or  before  the 
officials  thereof  in  person  or  through  persons  em- 
ployed by  him  for  that  purpose  and  to  represent  the 
company  in  all  matters  pertaining  to  its  lands  at  all 
times  and  places  (Ex  D  D.).  It  is  undisputed  that 
Stone  represented  the  company  as  fully  as  the  Land 
Agent  for  all  purposes  except  those  limited  person- 
allv  to  Eberlein  bv  said  resolution. 

The  making  of  the  false  affidavit  by  Eberlein  that 
he  had  caused  the  lands  selected  (in  suit)  to  be  care- 
fully examined  by  agents  and  employes  of  the 
Southern  Pacific  Railroad  Company  as  to  their 
mineral  or  agricultural  character  and  that,  to  the 
best  of  his  knowledge  and  belief,  none  of  said  lands 
contained  in  said  list  were  mineral  lands  and  that 
said  lands  were  vacant,  unappropriated  and  were 
not  interdicted  mineral  or  reserved  lands  and  were  all 
of  the  character  contemplated  by  the  grant  (July  27, 
1866).  was  the  act  of  the  Southern  Pacific  Railroad 


296 

Company,  for  the  principal  is  liable  for  the  agent's 
fraud. 

"In  the  first  place,  it  is  ven^  clear  that  when 
an  agent,  in  doing  the  business  of  his  principal 
and  acting  within  the  scope  of  the  authority 
conferred  upon  him,  makes  fraudulent  represen- 
tations or  concealments  with  the  knowledge  or 
consent  of  his  principal,  expressed  or  implied, 
so  that  the  act  of  the  agent  is  virtually  that  of 
his  principal,  then  the  principal  is  liable  in  the 
same  manner,  to  the  same  extent  and  for  the 
same  remedies  as  though  the  fraud  were  com- 
mitted by  himself  personally;  he  may  even  be 
liable  in  *  an  action  at  law  for  deceit.  The  doc- 
trine is  carried  much  farther.  When  the  agent 
acts  beyond  and  even  in  direct  opposition  to  his 
express  authority,  but  within  the  scope  of  his 
implied  authority— that  is,  within  the  apparent 
authority  contained  in  and  conferred  by  the 
terms  of  his  commission  or  the  nature  of  his 
official  functions  or  of  his  emplojTiient  or  ap- 
pearing from  a  prior  course  of  dealing  with  or 
on  behalf  of  his  principal  or  from  any  other 
mode  of  his  being  held  out  to  the  world  as  ap- 
pering  to  possess  the  authority,  and  the  prin- 
cipal is  personally  innocent  of  any  fraud — the 
principal  cannot  acquire  and  retain  any  benefit 
obtained  under  such  circumstances  from  the 
fraud,  representiitions  or  concealments.  If  the 
principal,  upon  learning  of  his  agent's  fraud, 
should  expresslv  ratify  and  adopt  the  trans- 
action, he  would  make  the  fraud  his  own.  An 
express  ratification,  however,  is  not  necessary. 
If  the  principal  receives  and  retains  the  pro- 
ceeds of  the  au-ent's  fraud — the  property,  money 
and  the  like  obtained  through  an  executed  trans- 
action— or  claims  the  benefit  of  or  attempts  to 
enforce  an  executory  obligation  thus  prornired, 
he  renders  himself  liable  for  the  fraudulent  acts 
of  his  agent.     The  defrauded  party  is  entitled 


297 

to  sneli  remedies,  legal  or  equitable,  as  are  ap- 
propriate to  the  nature  of  the  transaction.  The 
only  mode  in  which  the  principal,  under  these 
circumstances,  can  escape  liability  is  by  repudi- 
ating the  acts  of  his  agent  and  refusing  to  ac- 
cept or  retain  any  benefit  of  the  transaction 
immediately  upon  his  discovery  of  the  fraud," 

Pomeroy's  Equity  Jurisprudence,   (3d  Ed.)   Sec. 
909. 


It  is  somewhat  difficut  to  follow  the  reasoning  of 
appellants  leading  to  the  conclusion  urged  by  them 
that  the  non-mineral  affidavits  of  Eberlein  were  im- 
material and  "mere  red  tape".  The  record  shows 
that  it  was  the  onh^  evidence  offered  to  the  govern- 
ment of  the  character  of  the  lands  in  suit.  Under 
the  grant  patents  could  be  secured  only  to  agricul- 
tural lands,  mineral  lands  being  expressly  reserved 
to  the  United  States.  As  heretofore  shown,  the 
Secretary  of  the  Interior  in  the  exercise  of  authority 
conferred  by  Congress  required  that  every  selection 
list  be  accompanied  by  an  affidavit  identical  with  that 
filed  with  list  No.  89.  How  the  only  evidence  offered 
by  the  applicant  concerning  the  only  matter  to  be 
ascertained  could  be  considered  immaterial  and 
''mere  red  tape"  passes  understanding.  Certainly 
the  government,  which  through  its  Department  of' 
the  Interior  promulgated  July  9,  1894,  the  regula- 
tion which  prescribed  in  effect  that  no  patent  to 
lands  granted  to  railroads  should  issue  unless  the 
selection  thereof  was  accompanied  by  the  affidavit  in 
question,   can  b}'  no  sort  of  reasoning  be  held  to 


298 

have  regarded  such  an  affidavit  as  immaterial  and 
mere  matter  of  form.  That  it  was  the  most  import- 
ant and  most  material  thing  in  the  entire  process 
of  selection  is  manifest. 

In  Cosmos  Exploration  Company  vs.  Gray  Eagle 
Oil  Company,  104  Federal,  33,  an  affidavit  similar  in 
form  to  the  Eberlein  affidavit  came  under  review. 
Judge  Ross,  who  decided  that  case,  held  that,  even 
if  it  were  conceded  that  the  affidavit  was  not  required 
either  b}^  the  statute  or  by  any  rule  or  regulation  of 
the  Land  Department,  the  fact  remained  that  "the 
affidavits  were  made  and  filed  in  support  of  the 
selection  and  constituted  a  representation  and  one  of 
the  means  by  which  the  selectors  sought  to  secure 
the  lands ;  and,  being  made  and  used  for  the  purpose 
of  evading  and  defeating  the  laws  of  Congress,  as 
well  as  of  defrauding  the  claimants  under  the  min- 
ing laws,  no  court  of  equity  should  lend  them  its  aid 
in  securing  the  fruits  of  the  fraud." 

This  language  of  Judge  Ross  answers  conclusively 
the  contention  of  appellants  in  the  instant  case ;  and 
here  the  case  is  stronger  for  the  reason  that  the  Eber- 
lein affidavits  were  absolutely  required  by  valid  regu- 
lation of  the  Land  Department  and  without  it  the 
selection  list  would  and  could  not  have  been  con- 
sidered by  the  Land  Department,  the  language  of 
the  regulation  being  "the  railroad  company  will  be 
required  to  file  with  the  local  land  officers  an  affi- 
davit by  the  land  agent  of  the  company 

setting  forth  in  substance  that  he  has  caused  the 


299 

lands  mentioned  to  be  carefully  examined"  etc  (19 
L.  D.  21.) 

In  support  of  the  contention  of  the  government 
that,  upon  the  showing  hereinbefore  referred  to  and 
without  regard  to  the  positive  evidences  of  fraud 
hereafter  to  be  presented,  it  is  entitled  to  a  decree  in 
this  court  affirming  the  decree  below  annulling  the 
patent,  reference  is  once  more  made  to  the  case  of 
Cosmos  Exploration  Company  vs.  Gray  Eagle  Oil 
Cofupany,  supra,  the  leading  case  in  this  circuit  upon 
the  question  here  involved.  In  that  case  the  assignee 
of  a  forest  lieu  selector  who  had  applied  for  certain 
public  lands  under  the  exchange  provisions  of  the  act 
of  Congress  approved  June  4,  1897,  brought  suit  to 
enjoin  the  defendants  who  had  gone  upon  the  selected 
lands  and  were  engaged  in  developing  and  removing 
oil  therefrom.  The  selector  had  filed  the  usual  non- 
mineral  affidavit  alleging  that  the  land  did  not  con- 
tain minerals  and  was  not  mineral  land.  It  was 
claimed  on  behalf  of  the  defendants  that  the  land 
was  known  to  be  mineral  land  at  the  time  of  the 
selection  and  that  the  selection  was  made  because  of 
that  fact  and  with  the  sole  purpose  of  acquiring 
mineral  lands  excluded  from  the  operation  of  the 
act  in  question.  It  was  contended  by  the  plaintiff,  as 
by  appellant  in  the  instant  case,  that,  inasmuch  as 
there  had  been  no  actual  development  or  discovery 
of  oil  upon  the  land  at  the  time  when  the  forest  lieu 
selection  was  perfected,  consequently  the  lands  were 
not  known  mineral  lands  at  that  time  and  therefore 
could  not  with   propriety  be   selected.     From   the 


300 

evidence  adduced  Judge  Eoss  found  that  the  selector 
at  least  believed  the  lands  selected  to  be  oil  lands  and 
not  agricultural,  and  thereupon,  referring  to  the 
non-mineral  affidavits,  savs: 

"If,  instead  of  these  palpably  false  and 
fraudulent  statements,  the  affidavits  accompany- 
ing and  in  support  of  the  selection  had  stated  the 
truth — had  stated  that  the  applicants  at  least 
believed  the  lands  sought  contained  oil  and  that 
they  wanted  them  for  that  purpose  and  for  that 
purpose  only  and  desired  to  select  them  under 
the  law  authorizing  agricultural  lands  to  be 
taken  in  exchange  for  lands  situated  within  a 
forest  reserve  that  had  been  surrendered  to  the 
government — one  cannot  doubt  that  the  officers 
of  the  local  land  office  would  have  refused  to  file 
or  receive  the  selection  of  such  lands  under  the 
forest  reserve  lieu  land  act." 

If  in  the  instant  case  Eberlein  had  told  the  truth 
and  had  represented  that  he  had  caused  no  exami- 
nation of  the  lands  in  suit  to  be  made,  but  that  he 
and  other  officials  of  the  Southern  Pacific  Eailroad 
Company  and  the  Southern  Pacific  Company  be- 
lieved that  they  contained  oil,  it  does  not  admit  of 
doubt  that  the  Resfister  and  Receiver  at  Visalia 
would  peremptorily  have  rejected  the  attempted 
selection.  If  Eberlein  had  done  even  less  than  this 
and  had  made  an  affidavit  that  he  had  not  caused  the 
lands  to  be  examined  by  the  servants  of  the  railroad 
company  and  knew  nothing  whatever  of  their  charac- 
ter, whether  mineral  or  agricultural,  as  were  the 
actual  facts  in  this  case,  as  appears  from  his  own 
testimony,  it  cannot  be  doubted  that  the  attempted 
selection  would  have  suffered  the  same  fate.     In  a 


301 

word,  if  Eberlein,  instead  of  making  false  repre- 
sentations, had  told  the  truth  or  even  a  substantial 
part  of  the  truth,  the  assailed  patent  would  never 
have  issued. 

The  government  cannot,  in  closing  the  argument 
upon  this  phase  of  the  case,  do  better  than  adopt  the 
following  language  of  Judge  Ross  in  the  Cosmos 
Exploration  Company  case: 

"In  Finn  vs.  Hoyt,  D.  C.  (52  Federal  83),  a 
suit  was  brought  by  the  United  States  to  cancel 
two  patents  that  had  been  issued  by  the  govern- 
ment to  defendants  in  the  suit  for  certain  lands 
alleged  by  complainant  to  be  mineral  lands  and 
that  were  known  to  be  such  by  defendants  at  the 
time  they  were  purchased  as  agricultural  lands 
and  concerning  whose  character  the  defendants 
made  to  the  government  officers  at  the  time  of 
the  purchase  false  and  fraudulent  statements. 
The  court  found  that  the  preponderance  of  the 
evidence  showed  that  the  lands  were  valuable 
for  mineral  and  that  the  defendants  knew  that 
fact  at  the  time  they  represented  them  to  be 
agricultural  and,  accordingly,  acquired  the  pat- 
ent, citing  a  number  of  cases  in  support  of  its 
decision.  Surely,  if  a  court  of  equity  would 
annul  a  patent  issued  under  such  circumstances, 
as  it  undoubtedly  would,  it  should  not  grant  any 
equitable  relief  in  advance  of  patent  in  respect 
to  claims  based  upon  like  false  and  fraudulent 
representations. ' ' 

(The  citation  of  Finn  vs.  Hoi/t  is  an  error,  as  the 
title  of  the  case  is  U.  S.  vs.  Culver.) 

It  is  confidently  submitted  that  by  far  more  than 
"the  preponderance  of  the  evidence"  in  this  case  it 


302 

is  proven  that  the  lands  in  suit  at  the  time  of  their 
selection  were  valuable  for  mineral  and  that  the  de- 
fendants knevv^  that  fact.  Judge  Ross  says  that  a 
court  of  equity,  under  such  circumstances,  "undoubt- 
edly would"  annul  the  patent. 

4.    FRAUD. 

The  proofs  by  appellants  Southern  Pacific  Railroad  Company  of  the 
character  of  the  lands  in  suit  offered  in  connection  with  its  selection 
thereof  were  false  and  fraudulent  and  were  calculated  and  intended  to 
and  did  deceive  the  land  officers  of  the  government. 

Introductory: 

Enough  has  already  been  shown  to  warrant  the 
conclusion  that  Judge  Bean  committed  no  error  in 
rendering  the  decree  from  which  this  appeal  is 
prosecuted  and  the  government  might  with  great 
assurance  rest  its  argument  at  this  point;  but  the 
record  is  so  filled  with  positive  and  documentary 
evidence  of  the  fraud  and  deception  practiced  by 
appellants  that  the  government  is  under  the  duty  of 
inviting  the  attention  of  the  court  to  it  and  of  set- 
ting it  out  somewhat  in  detail. 

Of  the  evidence  upon  this  phase  of  the  case  Judge 
Bean,  after  finding  that  the  statement  in  the  affi- 
davits of  Eberlein  that  he  had  caused  the  lands  to 
be  carefully  examined  was  admittedly  false  and  that 
Eberlein  himself  testified  that  he  knew  nothing  of 
their  character  or  contents  at  the  time  when  he  made 
the  several  affidavits  and  that  the  insistence  of  the 
appellants  throughout  the  case  had  b(^en  that  no 
examination  of  the  lands  to  ascertain  their  mineral 
contents  had  been  made  prior  to  the  issuance  of  the 


303 

patent,  although  tliey  had  for  a  year  or  more  main- 
tained a  corps  of  expert  oil  geologists  who  were 
actually  engaged  in  examining  and  classifying  lands 
in  the  vicinity  for  the  purpose  of  ascertaining  their 
character,  says: 

"I  think  it  clearly  appears  from  the  docu- 
mentary evidence  in  the  case  and  particularly 
from  the  correspondence  from  Eberlein's  files 
(a  portion  of  which  was  kept  separate  from  the 
o-eneral  files  of  the  office  and  guarded  with  the 
utmost  secrecy  until  compelled  to  be  produced 
on  this  hearing)  that  at  the  time  the  selections 
were  made  and  patent  issued  the  officers  of  the 
companv  in  charge  of  the  matter  were  conscious 
that  the  lands  were,  if  not  actual,  at  least  prob- 
able  oil-bearing  and   that  the   selections   were 
made  and  strenuously  urged  to  patent  for  that 
reason   and   not  because   of   their   agricultural 
value."     (R.  72-3.) 

A  history  of  selection  list  No.  89  has  already  been 
set  out  in  this  brief  and  will  not  be  repeated  here 
except  insofar  as  may  be  necessary  to  a  proper 
understanding  of  the  evidence. 

Direct  and  positive  evidence  of  fraud: 

This  evidence  consists  of  certain  oral  proofs  and 
admissions  and,  in  addition,  a  series  of  secret  and 
confidential  papers  embracing  the  correspondence 
between  high  officials  of  appellants,  the  acting  land 
agent  of  the  Southern  Pacific  Eailroad  Company  and 
legal  counsel  in  San  Francisco  and  Washington, 
D.  C,  of  both  the  Southern  Pacific  Railroad  Com- 
pany and  the  Southern  Pacific  Company.  A  portion 
of  this  correspondence  had  been,  at  the  suggestion  of 


304 

Judge  W.  D.  Cornish,  vice-president  of  the  Southern 
Pacific  Company  and  president  of  the  Southern 
Pacific  Eailroad  Compan}^  (E.  1132-3),  carefully  seg- 
regated from  the  general  files  of  the  land  agent  and 
preserved  in  a  file  in  the  safe-deposit  vault  of  the 
California  Safe  Deposit  and  Trust  Company  in  San 
Francisco,  while  a  portion  of  it  of  a  secret  and  confi- 
dential nature  had  been  segregated  from  the  files  of 
the  office  of  Judge  Cornish  in  New  York  and  placed 
for  safe  keeping  in  a  desk  in  the  latter 's  private 
residence  in  East  Orange,  New  Jersey.  An  exami- 
nation of  this  correspondence  will  hereafter  make 
clear  the  reasons  for  its  concealment. 

Prefatory  to  an  extended  examination  of  this 
correspondence,  however,  it  may  be  well  to  consider 
the  following  evidence  in  the  record  in  support  of 
the  finding  of  Judge  Bean  that  the  correspondence 
in  question  "was  kept  separate  from  the  general  files 
of  the  office  and  guarded  with  the  utmost  secrecy 
until  compelled  to  be  produced  on  this  hearing" 
(Pv.  73). 

Eberlein  testified  that  the  correspondence  in  ques- 
tion was  not  kept  in  the  files,  but  in  the  safe-deposit 
vaults  of  the  California  Safe  Deposit  and  Trust 
Company  and,  when  needed,  was  brought  into  the 
office  and  kept  in  the  safe  (R.  1082).  This  corre- 
spondence related  to  the  projected  lease  to  the  Kern 
Trading  and  Oil  Company  of  which  much  has 
already  been  said  and  of  which  more  will  hereafter 
be  written.    Judge  Cornish,  the  high  officer  to  whom 


305 

Eberlein  was  responsible  and  reported,  instructed 
him  to  keep  them  to  himself,  saying  that  they  might 
thereafter  be  necessary  for  the  protection  of  both  of 
them.     Both  of  them  recognized  at  least  the  very 
ambiguous  position  in  which  they  were  placed,  if  the 
lease  to  the  Kern  Trading  and  Oil  Company  were 
made  and  especially  if  Eberlein  made  the  lease,  he 
having  also  made  the  selection  list  which  was  at  that 
time  unapproved  (R.  1128).    In  support  of  that  list 
he  had  made  an  affidavit  under  oath  that  the  lands  in- 
cluded therein  were  non-mineral  in  character.   "The 
fact  that  he  had  made  such  an  affidavit,  believing 
the  fact  to  be  as  stated,  it  did  not  seem  good  policy 
for  him  to  turn  around  and  make  a  lease  of  lands 
which  were  in  juxtaposition  to  the  selected  lands  and 
he  believed  and  Judge  Cornish  believed  thoroughly 
that  it  might  give  rise  to  trouble"  (R.  1129).  He  "na- 
turally would  expect  that,  if  the  lease  were  made  at 
that  time,  with  those  lands  mixed  up  as  they  were  or 
adjacent,  that  the  government  of  the  United  States, 
having  in  mind  that  they  were  very  active  about  that 
time  in  'nosing'  into  everything  that  affected  rail- 
road lands,  would  be  very  apt  to  call  that  lease  at 
least  in  question  and  make  an  effort  at  least — or  hold 
it  up  or  entirely  knock  it  out".    In  other  words,  he 
said,  the  effect  would  have  probably  been  to  com- 
pletely preclude  the  possibility  of  the  Southern  Pa- 
"  cific  Railroad  Company  acquiring  title  under  that 
list  (R.  1130).    After  the  fire  of  1906  Judge  Cornish, 
assuming  that  Eberlein 's  copies  of  this  correspond- 
ence had  been  destroyed,  notified  him  in  his  private 
car  out  of  Ogden  in  the  Fall  of  1907,  that,  "inasmuch 


306 

as  these  letters,  reports  from  me,  that  he  held  having 
come  from  me  in  all  these  years,  inasmuch  as  the 
papers  of  the  company  in  the  land  office  were  de- 
stroyed, v:liY.  he  destroyed  those" — Eberlein  under- 
standins"  him  to  say  that  he  had  destroyed  all  of  the 
papers  which  he,  Cornish,  had  received  from  him, 
Eberlein  (E.  1074-5). 

As  a  matter  of  fact,  while  the  correspondence  in 
question  was  damaged  by  the  fire  of  1906,  it  was  not 
actually  destroyed  and  thereafter  copies  were  caused 
by  Eberlein  to  be  made  from  the  scorched  remains. 
George  A.  Stone  had  charge  of  this  work  and  as- 
signed the  copying  to  Lottie  Abrams  who  subse- 
quently married  and  testified  as  a  witness  for  the 
goyernment  under  the  name  of  Charlotte  Dorothy 
Cunningham  (E.  1319).  She  identified  her  initials 
on  each  of  Exhibits  "JJ"  to  "SS"  inclusiye,  con- 
stituting the  correspondence  in  question,  as  also  the 
initials  "H.  K."  of  Herman  Koch,  a  fellow  employee 
in  the  land  office  of  the  Southern  Pacific  Eailroad 
Company.  The  copying  was  done  two  weeks  after 
the  San  Francisco  fire  of  April  18,  1906  (E.  1320). 
She  copied  these  exhibits  from  the  burned  originals 
of  letters  which  were  handed  to  her  by  George  A. 
Stone  who  told  her  to  keep  them  as  they  were  and 
compare  them  with  Herman  Koch  and  then  return 
them  to  him.  Stone.  Stone  told  her  to  go  over  and 
sit  at  one  side  of  the  room  near  a  little  bay  window 
and  compare  them  with  Koch  in  an  undertone.  He 
cautioned  her  not  to  allow  them  to  get  out  of  her 
hands,  Ijut  to  keep  them  herself  and  to  return  them 


307 

to  him  personally  (R.  1321).  She  was  impressed  by 
Stone's  manner  with  the  fact  that  "these  papers  were 
practically  private".  While  she  and  Koch  were 
comparing  them,  "Mr.  Stone  hovered  around  a  great 
deal"  (R.  1323). 

George  A.  Stone's  threats  of  exposure. 

Light  is  thrown  upon  this  situation  by  the  subse- 
quent use  to  which  Stone  with  success  put  his  knowl- 
edge of  the  contents  of  the  papers  constituting  this 
correspondence.  Differences  arising  between  him 
and  his  chief,  Mr.  Eberlein,  the  latter  advised  him 
that  his  services  would  terminate  December  31,  1907 
(R.  1029).  The  fact  that,  when  subpoenaed  as  a  wit- 
ness for  the  government.  Stone  at  once  went  to  the 
general  counsel  of  the  railroad  and  to  counsel  for 
appellants  and  notified  them  that  selection  list  No. 
89  was  made  up  at  the  suggestion  of  Professor  E.  T. 
Dumble,  shows  that  he  was  an  unwilling  witness  for 
and  hostile  to  the  United  States  (R.  1030).  He  Avas  at 
the  time  a  pensioner  of  the  Southern  Pacific  Com- 
pany and  on  the  payroll  of  the  Southern  Pacific 
Railroad  Company  (R.  1030).  He  testified  that  he 
wrote  to  Mr.  Kruttschnitt  about  his  discharge,  but 
that  he  had  no  recollection  of  stating  that  he  would 
lay  before  the  Department  of  Justice  and  give  to  the 
press  what  he  considered  an  irregularity  in  the 
selection  of  the  lands  in  suit  unless  he  was  re-instated 
(R.  1031),  but  that  he  probabh^  threatened  at.  one 
time  to  do  so.  The  letters  which  Stone  actually  wrote 
in  this  connection  were  not  in  evidence  at  that  time. 
Later,   Mr.   Julius   Kruttschnitt,   formerly   general 


308 

manager  and  at  the  time  of  testifying  the  highest 
officer  of  the  Southern  Pacific  Company,  no  doubt 
familiar  with  the  fact  that  Stone  had  testified  that 
he  had  jDrobably  written  threatening  letters,  made  a 
virtue  of  necessity  and,  when  called  upon  for  the 
letters  in  c^uestion,  produced  them.  The  first  of  these 
letters,  dated  January  8,  1908,  was  addressed  to 
E.  E.  Calvin,  then  vice-president  of  both  the  South- 
ern Pacific  Company  and  of  the  Southern  Pacific 
Railroad  Company.  Calvin  first  appears  as  an  offi- 
cial in  1905,  the  year  following  the  date  of  the  patent, 
when  he  succeeded  Mr.  Kruttschnitt  as  vice-president. 
He,  therefore,  was  presmnably  ignorant  of  the  fraud 
in  question  and  therefore  Stone's  letter  to  him  was 
of  a  character  cjuite  different  from  those  which  he 
thereafter  wrote  to  officials  who  he  doubtless  thought 
had  guilty  knowledge  of  the  transactions  resulting 
in  the  assailed  patent.  His  letter  to  Mr.  Cahin 
was  as  follows : 

*'Dear  Sir:  Have  received  a  letter  from  the 
Acting  land  agent  of  the  Southern  Pacific  Rail- 
road Company  advising  me  that  my  resignation 
as  assistant  land  agent  was  accepted,  to  take 
effect  December  31,  1907.  As  I  have  not  ten- 
dered my  resignation  and  am  not  aware  of  any 
good  cause  for  dismissal,  it  would  appear  that  I 
am  to  be  dropped  to  satisfy  the  whim  or  preju- 
dice of  an  erractir-  official,  and  as  this  is  not  the 
kind  of  treatment  usually  accorded  to  emj^loyes 
by  the  Southern  Pacific  Company,  I  hope  that 
you  will,  in  fairness  to  me  and  foi'  the  best  in- 
terests of  the  company,  carefully  investigate  the 
matter  and  arrange  for  a  transfer  to  some  other 
emplo^Tnent.  I  commenced  service  as  a  flag- 
man with  engineering  party  of   Central  Pacific 


309 

R.  R.  Co.  July,  1865,  and  have  been  in  active 
service  of  the  Harriman  System  over  thirty -five 
years,  during  that  period  serving  as  engineer  on 
reconnoissance,  location,  construction  and  main- 
tenance under  Mss.  Montague,  Clement,  Curtis 
and  Hood,  and  for  the  past  ten  years  in  the 
Southern  Pacific  Land  Dept.  as  land  examiner 
under  Madden  and  assistant  land  agent  under 
Eberlin. 

"Recent  illness  and  death  in  mv  familv  have 

t.'  t/ 

prevented  my  earlier  submission  of  the  matter. 

Yours  respectfully, 

"Geo.  a.  Stone. 

"169  10th  St.,  Oakland,  Cal." 

"Copy  to  Mr.  Kruttschnitt, 
"Copy  to  Judge  Cornish. 

(Ex.  5-0;  R.  3118-19.) 

A  copy  of  the  foregoing  letter  was  mailed  the 
same  day  to  Mr.  Kruttschnitt  and  in  the  letter  trans- 
mitting it  language  is  used  the  aptness  of  which 
could  not  fail  to  be  apparent  to  one  who  shared  in 
Stone's  guilty  knowledge.    That  letter  follows: 

"Dear  Sir:  I  enclose  herewith  copy  of  letter 
mailed  today  to  Mr.  Calvin  asking  for  transfer 
from  Land  Dept.  to  other  service.  As  land  ex- 
aminer and  assistant  land  agent  I  have  obtained 
a  knowledge  of  the  lands  and  records  not  pos- 
sessed by  any  other  official  or  employee  of  the 
company,  but  notwithstanding  this,  and  that  I 
have  for  several  jcrys  borne  a  large  part  of  the 
burden,  Eberlein  has  seen  fit  to  force  me  out. 
I  think  the  quality  of  my  work  and  the  confi- 
defdial   character  of  my  employment   in  land 


310 

department  indicate  that  tlie  best  interests  of 
the  company  will  le  served  by  not  turning  me 
down  after  long  and  faithful  service.  Mr.  John 
D.  Isaacs  has  known  me  for  many  years. 

Yours  respectfully, 

"Geo.  a.  Stoxe, 
"169  Tenth  St., 

"Oakland,  Calif." 
(Ex.  5-N;  E.  3117-18.) 

In  reading  the  foregoing  letter  it  requires  no  great 
gift  of  penetration  to  recognize  the  element  of  threat 
and  appeal  to  fear.  Stone  could  have  been  no  more 
forceful  nor  effective  if  he  had  simply  written:  "Be 
careful  how  you  turn  down  a  man  who  knows  as 
much  about  the  record  of  the  Southern  Pacific  Com- 
pany in  connection  with  securing  patents  as  I  know. 
If  you  are  not  willing  to  consider  me,  you  will  do 
well  to  consider  the  interests  of  the  company." 

Mr.  Kruttschnitt  testified  that  he  regarded  this 
letter  as  "impudent  and  cryptic",  but  that  he  did  not 
have  Stone  peremptorily  discharged  because  he  had 
no  jurisdiction  of  him  or  Mr.  Eberlein  (R.  3119). 
At  that  time  Mr.  Kruttschnitt  held  a  very  important 
position  in  Southern  Pacific  affairs  and  his  explana- 
tion that  he  overlooked  impudence  on  the  part  of  a 
subordinate  for  the  mere  reason  that  he  was  in 
another  department  is  far  from  satisfactory.  If  he 
actually  lacked  the  power  to  discharge,  a  mere  word 
from  him  to  Judge  Cornish  would  have  been  suffici- 
ent to  rid  the  service  of  an  "impudent"  subordinate 
who  wrote  "cryptic"  letters.     That  he  was  in  fact 


311 

disturbed  is  sliown  by  the  circumstance  tliat  lie  took 
Stone's  letter  with  him  on  a  trip  to  New  York  and 
conferred  concerning  its  contents  with  Judge  Cor- 
nish; for  on  Febraar}^  13,  1908,  he  wired  Judge 
Cornish  as  follows:  "You  were  to  advise  me  further 
in  regard  to  George  A.  Stone."  Although  he  is  not 
shown  to  have  heard  from  Stone  in  the  meantime, 
he  again,  namely^  February  19,  wired  Judge  Cornish 
from  Chicago  asking  the  latter  to  let  him  know 
what  the  trouble  was  with  Stone  (R.  3121). 

February  2J:  Judge  Cornish  wired  Mr.  Krutt- 
schnitt : 

"As  near  as  I  can  judge  George  A.  Stone  was 
dropped  in  the  interest  of  economy  and  because  he 
was  no  longer  fit  for  the  kind  of  work  he  preferred 
to  do."  On  the  same  day  Mr.  Kruttschnitt  wrote 
Mr.  Calvin  as  follows: 

"Referring  to  letter  to  you  from  George  A. 
Stone  dated  January  8,  a  copy  of  which  he  sent 
to  me,  in  reference  to  the  matter  of  termination 
of  his  services  with  the  Southern  Pacific  Com- 
pany. I  quote  below  a  telegram  from  Mr.  W.  D. 
Cornish  of  this  date  which  explains  the  action 
taken  in  this  case," 

quoting  telegram  of  that  date  already  set  out. 

In  the  meantime,  on  February  14,  1908,  Stone, 
having  received  no  satisfactory  answer,  wrote  El)er- 
lein  as  follows : 

"Dear  Sir: 

"Will  you  kindly  advise  me  whether  the  com- 
pany is  willing  in  any  way  to  show  its  apprecia- 


312 

tion  of  my  faithful  service  of  over  thirty-five 
years?  If  the  company  has  no  further  use  for 
my  services,  as  would  appear  from  recent  corre- 
spondence with  yourself  and  other  officials,  it 
seems  to  me  that,  as  I  have  nearly  doubled  the 
length  of  service  required  for  retirement,  I  may 
properly  be  placed  on  the  shelf  with  disabled 
and  superannuated  veterans.  Thanking  you 
in  advance  for  your  kindly  offices  in  my  behalf, 
I  remain, 

"Yours  truly, 

"George  A.  Stone/' 
(Ex.  5-M;  R.  3117.) 

On  March  23,  1908,  coming  squarely  into  the  open, 
Stone  addressed  Mr.  Kruttschnitt  at  San  Francisco 
in  language  of  unveiled  meaning  as  follows: 

"Dear  Sir: 

"On  January  8,  1908,  I  addressed  you  at  Chi- 
cago enclosing  copy  of  a  letter  I  had  that  day 
sent  to  Mr.  E  E.  Calvin  relative  to  action  taken 
by  Mr.  Eberlein  in  forcing  me  out  of  my  position 
as  assistant  land  agent.  To  this  letter  Mr.  Cal- 
vin replied  briefly  that  he  had  no  jurisdiction 
over  the  affairs  of  the  land  department  and 
could  offer  me  no  other  emplojanent. 

"On  February  14,  1908,  I  addressed  a  letter 
to  Mr.  Eberlein  (copy  enclosed  herewith)  sug- 
gesting retirement  if  my  services  were  no  longer 
desired  by  the  company.  To  this  letter  no  reply 
has  been  received. 

"I  served  the  company  faithfully  and  Avell 
many  years  and  hoped  that  its  interests  would 
always  be  mine,  but  if  a  hearing  and  fair  trcat- 
7neni  are  not  accorded  me  witlwnt  further  delay 
my  services  will  he  at  the  disposal  of  the  news- 
paper press,  the  United  States  Attorney  General 
mid  others. 


313 

"Trusting  that  you  will  be  able  to  give  this 
matter  some  attention  while  in  San  Francisco, 
I  remain. 

Very  respectfully  yours, 

"George  A.  Stone, 
"2635- A  Channing  Way, 

"Berkeley,  Calif." 
(Ex.  5-L;  E.  3116-17.) 

Mr.  Kruttschnitt's  reply  to  this  letter,  it  is  sub- 
mitted, is  not  such  as  would  be  expected  from  one 
who  was  conscious  both  of  his  own  innocence  and  a 
clean  record  in  the  affairs  of  the  company  whose 
trusted  officer  he  was.  If  Stone  had  been  bluffing  or 
attempting  blackmail  and  Mr.  Kruttschnitt  had  be- 
lieved that  he  was  doing  so,  it  requires  no  effort  of 
the  imagination  to  conceive  that  his  reply  would  have 
been  radically  different  from  that  which  he  actually 
made.  Stone's  letter  was  dated  March  23d.  The 
answer  from  Mr  Kruttschnitt  was  written  the  same 
day.  No  comment  is  needed  either  upon  that  circum- 
stance or  upon  the  compromising  and  conciliatory 
character  of  the  reply  that  he  had  no  jurisdiction 
over  the  land  department  and  was  referring  Stone's 
letter  to  Judge  Cornish  (R.  3120). 

The  result  of  the  correspondence  thus  cited,  to-wi  t, 
the  immediate  pensioning  of  Stone,  is  eloquent  of 
the  effectiveness  of  his  threats  and  of  the  fear  under 
which  they  put  those  to  whom  they  were  addressed. 
As  long  as  he  spoke  in  terms  of  his  long  service  and 
devotion  to  his  employer,  deaf  ears  were  turned  to 
his  request ;  but,  as  soon  as  he  changed  his  course  and 
wrote  boldly  of  what  he  would  do  if  his  demands 


314 

were  not  met,  "impudent"  though  he  was  to  his 
superior  officers,  he  received  the  reward  of  the  faith- 
ful. As  long  as  he  was  "cr3^ptic",  he  was  ineffective ; 
as  soon  as  he  became  open  and  direct,  he  was  success- 
ful. That  he  was  pensioned  Stone  himself  testified 
(R.  1030).  Mr.  Kruttschnitt  testified  that,  if  Stone 
was  entitled  to  a  pension,  granting  it  was  no  favor 
to  him,  since  it  was  a  right  alread}^  given  him  and  all 
other  employees  3^ears  before  by  the  board  of  direc- 
tors (R.  3121).  It  is  passing  strange  that  the  rail- 
road's action  under  the  circumstances  was  such  that 
Stone  was  compelled  to  have  recourse  to  the  impu- 
dent and  insulting  language  set  out  in  his  letters. 

Eberlein  takes  charge  of  the  Southern  Pacific  Railroad  Company's  land 
office. 

Reverting  for  a  moment,  it  is  important  at  this 
point  to  note  that  prior  to  the  events  last  treated 
C.  W.  Eberlein  had  come  to  San  Francisco  in  June, 
1903,  to  take  up  the  matter  of  the  consolidation  and 
reorganization  of  certain  land  grants  and  that  later, 
about  August  3,  1903,  he  was  appointed  acting  land 
agent  of  the  Southern  Pacific  Railroad  Company. 
The  formal  resolution  of  the  board  of  directors  ap- 
pointing him  acting  land  agent  was  adopted  Septem- 
ber 2,  1903,  and  is  set  out  on  pages  1038-9  of  the 
record.  The  last  paragraph  of  the  resolution,  by 
ratifying  and  confirming  all  acts  theretofore  done  by 
Eberlein  as  acting  land  agent  within  the  purview  of 
the  resolution,  shows  that  Eberlein  had  begun  his 
work  before  the  resolution  was  adopted.  It  was  dur- 
ing the  very  next  month,  October,  that  the  original 


315 

selection  list  No.  89  was  prepared  pursuant  to  Pro- 
fessor Bumble's  coming  in  and  pressing  the  selection 
of  the  lands  in  suit  (R.  1029) ;  and  it  is  to  be  remem- 
bered that  it  was  then  that  Eberlein,  new  to  the  work 
in  California  and  without  knowledge,  as  he  himself 
testified,  of  the  lands  in  suit,  but  relying,  as  he  said, 
upon  the  knowledge  of  George  A.  Stone  (R.  1136), 
who  in  turn  testified  that  such  knowledge  as  he  had 
of  the  lands  was  general  in  character  based  uj^on 
general  knowledge  of  the  country  (R.  1029),  made 
one  of  the  non-mineral  affidavits  alleged  by  the  gov- 
ernment to  have  been  false  and  fraudulent.  The  list 
and  affidavit  were  prepared  by  Stone  and  were  pre- 
sented to  Eberlein  for  his  signature  (R.  1136-7). 
Stone  had  at  no  time  examined  the  lands  in  suit  (R. 
1029)  ;  Eberlein  knew  nothing  whatever  of  them  (R. 
1137)  and  sent  no  one  out  at  any  time  to  make  an 
examination  of  them.  In  the  light  of  this  situation 
the  positive  and  unequivocal  character  of  the  affi- 
davit is,  to  say  the  least,  interesting.  It  is  here  re- 
peated : 

'^Charles  W,  Eberlein  beinsr  dulv  sworn,  de- 
poses  and  says  that  he  is  acting  land  agent  of  the 
Southern  Pacific  Railroad  Company;  that  he  has 
caused  the  lands  selected  in  said  company's  list 
No,  89  to  be  carefully  examined  by  the  agents 
and  employees  of  said  company  as  to  their  min- 
eral or  agricultural  character  and  that,  to  the 
best  of  his  knowledge  and  belief,  none  of  the 
lands  returned  in  said  list  are  mineral  lands, ' ' 

The  patent  was  issued  December  12,  1904.  In 
February,  1900,  the  lands  in  suit,  together  with  forty- 
four  other  townships,  had  been  suspended  from  dis- 


316 

position  by  the  Commissioner  of  the  General  Land 
Office  (Ex.  QQQ ;  R.  1524-5).    The  township  contain- 
ing the  lands  in  suit  had  not  then  been  surveyed  and, 
consequently,  the  lands  in  suit  were  not  susceptible 
of  any  form  of  entry  under  the  land  laws  of  the 
United  States.     The  township  was  surveyed  during 
1901  and  1902  and  the  survey,  including  the  plat  and 
field  notes,  was  formally  approved  and  filed  August 
1,  1902  (Ex.  "E";  R.  107).    In  that  survey  the  lands 
in  suit,  because  of  their  supposed  oil  character,  had 
been  returned  as  mineral  lands  and  within  a  mineral 
district.     Meanwhile,    following   up   the   geological 
examinations    in    1887    by    the    railroad    company 
through  John  R.  Scupham,  consulting  engineer  of 
the  directors  of  the  Southern  Pacific  Company  and 
the  Southern  Pacific  Railroad  Company  (R.  585), 
the    railroad    continued    its    examinations    through 
J.  B.  Treadwell,  oil  expert  of  the  Southern  Pacific 
Company,  with  the  result  that  Treadwell  prepared  a 
certain  map  bearing  the  date  of  September  17,  1902, 
and  introduced  in  evidence  and  kno^^^l  as  Exhibit 
115,  on  which  he  showed  in  red  color  all  of  the  odd 
sections  of  land  falling  within  the  indemnitv  limits 
of  the  railroad  company's  grant  which  he  at  that 
time  caused  to  be  reserved  from  sale  for  agricultural 
uses  ''because  in  or  near  oil  territorv",  therebv  indi- 
eating  his  belief  that  they  were  oil  lands.    This  policy 
on  the  part  of  the  railroad  of  withdrawing  its  oil 
lands  from  sale,  instituted  presumably  by  Treadwell, 
was  adopted  and  followed  up  by  those  who  succeeded 
him  in  the  railroad's  employ.    The  map  in  question 
bears  witness  to  the  withdrawal  by  Treadwell  because 


317 

of  their  oil  possibilities  and  the  reservation  from  sale 
for  agricultural  uses  of  lands  immediately  adjoining 
the  lands  in  suit  on  the  north,  west,  south  and  east, 
those  on  the  south  in  the  same  and  adjoining  town- 
on  the  west  in  the  same  and  adjoining  townships, 
those  on  the  south  in  the  same  and  adjoining  town- 
ships and  those  on  the  east  in  the  same  and  adjoining 
townships.  Thus,  Treadwell  had  in  1902  reserved 
from  sale,  because  in  or  near  oil  territory,  twenty- 
three  sections  or  parts  of  sections  actually  in  the 
Elk  Hills,  including  all  of  the  sections  or  parts  of 
sections  in  the  township  containing  the  lands  in  suit 
patented  to  the  railroad  company,  nine  in  number. 

Treadwell  first  took  the  stand  as  a  witness  for  the 
government  and,  when  questioned  on  cross-examina- 
tion by  counsel  for  appellants,  said:  "I  know  the 
Elk  Hills.  None  of  my  withdrawal  orders  took  in 
any  portion  of  the  Elk  Hills"  (E.  435).  Exhibit 
115,  the  map  in  question,  was  not  introduced  in  evi- 
dence until  several  months  later,  when  Professor  E. 
T.  Humble,  consulting  geologist  of  the  Southern  Pa- 
cific Company,  was  on  the  stand  as  a  witness  for 
appellants.  There  ivas  originally  no  suggestion  from 
Treadtvell  that  his  reservations  or  withdrawals  in- 
cluded lands  other  than  those  which  he  helieved 
contained  oil;  but  later,  when  as  a  witness  for  ap- 
pellants he  was  confronted  with  Exhibit  115,  his  own 
map,  and  was  face  to  face  with  a  record  made  by 
himself  in  1902  which  flatly  contradicted  his  testi- 
monv  in  1912  that  he  made  no  withdrawals  in  the  Elk 
Hills,  he  confessed  and  tried  to  avoid  by  saying  that 


318 

while  his  reservations  had  included  lands  in  the  Elk 
Hills  and  in  the  very  township  in  which  the  lands  in 
suit  lie  (R.  3423)  and  he  got  the  data  or  information 
upon  which  he  made  reports  respecting  withdrawals 
from  personal  examinations,  his  reservations  went 
beyond  where  he  ever  expected  to  get  oil  (R.  3424). 
In  explanation  of  the  fact  that,  although  he  shaded 
as  oil  lands  the  sections  on  all  sides  of  the  lands  in 
suit,  he  did  not  so  shade  the  lands  in  suit,  he  said 
that  the  reason  for  not  doing  so  was  that  they  were 
then  unsurveyed  (R.  3458-9).  Suiwey  of  the  lands 
in  suit,  as  heretofore  noted,  had  been  filed  and  ap- 
proved in  the  month  preceding  that  in  which  Exhibit 
115  was  made ;  but  Treadwell  did  not  know  of  this,  as 
is  shown  bv  the  fact  that  the  section  lines  across  the 
lauds  in  suit  are  dotted  broken  lines  which  indicate 
unsurveved  lands. 

At  the  time  in  question  Treadwell  was  subject 
to  the  orders  of  C.  P.  Hunting-ton,  H.  E.  Hunt- 
ington and  Julius  Kruttschnitt,  vice-president  of  the. 
Southern  Pacific  Railroad  Company  and  assistant  to 
the  president  of  the  Southern  Pacific  Company  (R. 
426),  as  well  as  of  E.  H.  Harrunan,  president  of 
both  the  Southern  Pacific  and  the  Southern  Pacific 
Railroad  Companies.  When  a  controversy  arose 
between  Treadwell  and  Jerome  Madden,  the  prede- 
cessor as  land  agent  of  Mr.  Eberlein,  on  account  of 
Treadwell's  recommendations  of  the  withdrawal  of 
lands  from  sale  by  the  railroad  at  agricultural 
prices,  Mr.  C.  P-  Huntington  settled  it  by  ordering 
Madden  to  withdraw  from  sale  anv  lands  that  Tread- 


319 

well  recoiimiended  (R.  426-7).  During  this  time 
Treadwell  made  reports  to  H.  E.  Huntington  and 
Julius  Kruttsclmitt ;  so  that,  as  early  as  September 
17,  1902,  the  date  on  which  Exhibit  115  was  prepared, 
Treadwell  had  not  only  examined  the  lands  in  suit, 
which  were  then  unsurveyed,  as  he  thought,  but  all 
of  the  lands  in  the  Elk  Hills  adjoining  the  lands  in 
suit  on  all  sides  and  had  indicated  upon  his  map  and 
doubtless  in  liis  reports  as  oil  land  every  section  of 
land  in  the  Elk  Hills  which  at  that  time  was  either 
surveyed  or  patented,  omitting  the  lands  in  suit  from 
his  recommendation  that  they  be  reserved  from  sale 
because  of  their  oil  character,  not  because  he  did  not 
believe  them  to  contain  oil,  but  solely  because  at  that 
time  they  were  unsurveyed,  as  he  believed,  and  un- 
patented (R  3158-9). 

The  circumstances  under  which  Josiali  Owen  be- 
gan his  labors  as  oil  geologist  of  appellants  around 
McKittrick  and  the  work  which  he  did  and  the  re- 
ports which  he  made  have  already  been  set  out. 
Before  leaving  San  Francisco  Mr.  Owen,  after  con- 
ference with  Mr.  Kruttsclmitt,  was  provided  with 
maps  showing  the  company's  holdings,  including 
Exhibit  115  which  Treadwell  had  returned  to  Jerome 
Madden,  the  land  agent  at  that  time.  Humble  testi- 
fied that  he  received  the  map  from  the  latter  in 
December,  1902,  and  had  kept  it  in  his  possession 
until  produced  in  this  case  (R.  2901).  Thus,  it  has 
been  shown  that  both  Owen  and  Humble  were 
familiar  with  the  policy  of  withdrawing  oil  lands 
from  sale  as  early  as  1902,  which  policy  Dumble  con- 
tinued in  force  (R.  3001). 


320 

Owen  went  from  San  Francisco  to  McKittrick 
during  September,  1902.  In  November  Dumble 
accompanied  Treadwell  to  the  McKittrick  field  to 
inspect  the  oil  properties  (E.  2902-3-4)  and  reported 
to  Kruttschnitt  by  letter  of  December  4,  1902,  the 
results  of  his  trip  (Ex.  117;  R.  2906),  the  report 
being  in  the  form  of  a  letter  which  concluded  as 
follows : 

"I  propose  to  take  up  their  examination  in  a 
systematic  way  during  the  coming  year  in  order 
to  determine  as  far  as  can  be  done  from  surface 
indications  and  geological  structure  tvJiere  oil  is 
to  be  expected  in  this  region  icitli  especial  refer- 
ence to  deposits  near  any  of  the  lands.  So  far 
as  I  can  judge  from  a  trip  which  I  have  just 
made  over  this  territory,  this  work  promises 
results  of  the  greatest  value  to  the  company" 
(E.  2907). 

In  March,  1903,  Dimible  took  active  charge  and 
assumed  full  direction,  Owen  working  under  him 
and  having  charge  of  the  oil  fields  (E.  2907).  There- 
after followed  Owen's  report  of  March  25,  1903, 
heretofore  referred  to,  in  which  he  stated  that  there 
was  but  one  oil  horizon  and  that  he  had  traced  its 
outcrop  all  the  way  to  Sunset  and  found  that  there 
was  but  one  oil  sand  which  he  believed  it  would  be 
possible  to  trace  to  the  Kern  Eiver  fields  (E. 
1619-20). 

Some  time  in  the  Fall  of  the  year  1903  and  after  a 
thorough  examination  made  by  Owen  in  the  field 
and  report  to  Dumble  which  Dumble  in  turn  trans- 
mitted to  Mr.  Kruttschnitt  (E.  2912),  Dumble  went 


321 

into  the  land  department  of  the  Southern  Pacific 
Eailroad  Company  in  San  Francisco  and,  in  the 
presence  of  George  A.  Stone,  assistant  to  Eberlein, 
the  acting  land  agent,  suggested  that  the  lands  in 
suit  be  selected.    Stone's  words  as  a  witness  were: 

"The  lands  mentioned",  meaning  the  lands  in 
suit,  "were  placed  in  that  list  at  the  suggestion 
of  Mr.  E.  T.  Dumble,  I  think"  (E.  1029).  He 
also  said :  "I  regard  the  selection  of  these  lands 
as  irregular.  Mr.  Dumble,  as  the  geologist,  I 
thought  pressed  the  selection  for  reasons  best 
known  to  himself.  I  supposed  as  a  geologist  he 
thought  they  were  oil  lands.  He  pressed  the 
selection  of  this  land  probably  within  thirty 
days  prior  to  the  list  in  1903,  not  earlier  than 
September  nor  later  than  November,  1903.  This 
occurred  in  October  of  that  year." 

After  Dumble  came  in  and  pressed  the  selection  of 
these  lands.  Stone,  under  the  direction  of  Eberlein, 
started  the  office  force  to  prepare  the  list  and,  be- 
cause of  the  hurry  incident  to  Dumble 's  "pressing," 
caused  to  be  set  aside  the  work  of  making  up  new 
records  and  lists  of  lands  in  which  they  were  busily 
engaged  at  that  time  (R.  1030).  It  has  already  been 
shown  that  Stone  at  no  time  made  any  examination 
of  the  lands  embraced  in  list  No.  89  and  had  no 
knowledge  of  them  except  such  knowledge  as  was 
general  in  character  from  his  general  knowledge  of 
the  country  (R.  1029). 

A  brief  review  of  some  important  evidence  is 
necessary  as  introductory  to  and  explanatory  of 
what  is  to  follow: 


322 

March  25,  1903,  Owen  had  made  to  Dumble  his 
report  in  which  he  described  the  "fold  north  of  the 
McKittrick"  and  transmitted  the  map,  Exhibit  157, 
showing  the  anticline  running  from  section  6  of 
30-22,  on  which  there  were  two  producing  wells 
(Exhibit  Ha),  through  the  lands  in  suit.  "This 
fold,"  he  wrote,  "exposes  the  oil  sands  in  several 
places  and  in  some  of  the  exposures  the  sands  are 
strongly  impregnated  with  asphaltum  and  producing 
ivells  ouglit  to  he  found  along  this  exposure.' 


yf 


A  comparison  of  Exhibit  157  with  Exhibits  4-Sa 
and  4-Sb,  a  plat  contained  in  a  note-book  carried 
constantly  in  the  field  by  Josiah  Owen  and  produced 
under  subpoena  duces  tecum  by  his  son  (E.  1638), 
shows  the  former  to  be  but  a  finished  reproduction 
of  the  latter.  It  is  evident  that  the  plat  book  was 
in  existence  prior  to  March  25,  1903.  The  Exhibit 
4-Sc,  which  is  a  portion  of  the  plat-book  near  the 
end,  is  dated  "October  15,  '04,"  while  Exhibits  4-Sa 
and  4-Sb  are  pages  44  and  45  of  the  same  plat  book 
found  considerablv  in  advance  of  the  middle  of  the 
book.  It  is  to  be  presumed,  therefore,  that  Exhibits 
4-Sa  and  4-Sb  were  made  by  Owen  prior  to  the 
entries  following  it  many  pages  after  and  that,  since 
Exhibit  4-Sc,  found  near  the  end  of  the  book,  is 
dated  October  15,  1904,  Exhibits  4-Sa  and  4-Sb  were 
made  considerably  prior  to  that  date. 

Dumble  admits  that  he  recteived  Exhibit  157  with 
the  report  of  March  25,  1903,  from  Owen  (R.  2977) 
and,  although  he  admits  that  on  September  21,  1903, 


323 

he  sent  two  maps  to  Kruttschnitt,  he  denied  that 
Exhibit  157  Avas  among  them  (R.  2977).   Appellants 
offered  in  evidence  as  one  of  the  maps  sent  Mr. 
Kruttschnitt  by  Dumble   September  21,   1903,  Ex- 
hibit 156;  but  the  letter  in  question  speaks  of  "the 
attached  maps"  and  this  must  mean  at  least  two. 
Whatever  the  other  map  or  maps  was  or  were,  no 
offer  of  it  or  of  them  was  made  by  appellants.    Mr. 
Kruttschnitt  also  denied  having  received  Exhibit  157. 
The  fact  remains  that  Bumble's  letter  of  September 
21,  1903,  to  him  referred  to  "untested  anticlinals 
which  show  good  indications  of  oil"  which  repre- 
sented the  third  class  of  "probable  oil  lands"  re- 
ferred to  in  the  same  paragraph.     The  only  map 
produced  in  evidence  in  this  case  which  shows  an 
untested  anticline  is  Exhibit  157,  which  was  trans- 
mitted to  Dumble  in  Owen's  letter  of  March  25, 
1903,  the  untested  anticline  being,  in  the  language 
of  Owen,  "the  fold  north  of  the  McKittrick."    Ap- 
pellants showed  great  ability  to  procure  old    maps 
from   persons  with   whom  the   government   failed. 
For  instance,  Treadwell  as  a  witness  for  the  govern- 
ment stated  that  all  his  maps  burned  in  the  San 
Francisco  fire  of  1906,  while,  when  called  as  a  wit- 
ness for  defendants,  he  produced  several  that  acci- 
dentally had  found  their  way  into  certain  files  in 
Los  Angeles  and  had  thereby  escaped  the  destroying 
flame.    Professor  Dumble  in  the  letter  of  September 
21,  1903,  speaks  of  maijs;  but  appellants  have  pro- 
duced only  one.    It  seems  fairly  certain,  then,  that 
Mr.  Kruttschnitt  was  in  error  in  denying  that  he 
received  a  copy  of  Exhibit  157.    Exhibit  156  shows 


324 

no  "untested  anticlinals"  and  it  is  the  only  map 
which  appellants  are  willing  to  admit  that  Mr. 
Kruttschnitt  received. 

It  is  res]DectfullY  submitted  that  the  map  which 
delineated  the  only  "untested  anticlinal"  shown 
upon  am^  ma23  introduced  in  evidence  is,  logically 
and  with  great  ceiH;ainty,  the  map  which  Dumble 
would  have  sent  and  actuallv  did  send  to  Mr.  Krutt- 
sclmitt. 

Five  days  after  receipt  of  this  letter  from  Dumble 
of  September  21,  1903,  referring  to  the  untested  anti- 
clinal maps  Kruttschnitt  received  from  Eberlein 
what  we  mav  here  term  for  convenience  the  first  or 
beginning  of  the  correspondence  containing  positive 
and  direct  evidence  of  the  fraud  of  aj^pellants  in 
securing  the  assailed  patent.  That  letter  itself  is  not 
in  the  record,  but  that  it  was  written  appears  from  a 
letter  of  October  12,  1903,  from  D.  A.  Chambers,  the 
Washington,  D.  C  attorney  of  api3ellants,  to  Mr. 
Kruttschnitt  in  which  the  former  writes : 

"Mr.  Eberlein  says  that  no  selection  of  any  of 
these  lands  had,  when  he  wrote,  been  made  by 
the  Southern  Pacific  Railroad  Company,  but 
that  he  expected  to  tender  a  selection  list  within 
a  week  or  ten  days  from  the  date  of  his  letter 
to  you  and  he  suggested  that  you  might  ask  that 
special  attention  be  given  here  to  the  patenting 
of  this  list."    (R.  1474-5.) 

In  the  first  paragraph  of  the  letter  acknowledg- 
ment is  made  of  the  receipt  of  a  copy  of  a  letter 
from  Eb^erlein  to  Mr.  Kruttschnitt  of  September  26 ; 


325 

so  that  the  date  of  Eberlein's  letter  to  Kruttschnitt 
is  fixed  as  of  September  26,  five  days  after  the  receipt 
by  Mr.  Kruttschnitt  of  Dumble's  letter  referring  to 
untested  anticlinal  maps  (R.  1474-5). 

October  12,  1903,  Chambers  wrote  to  Kruttschnitt 
the  letter  from  which  the  foregoing  is  quoted  and 
stated  that,  as  soon  as  Eberlein  tendered  the  list  for 
the  lands  in  suit  and  it  w^as  transmitted  to  the  Gen- 
eral Land  Office,  he  would  "at  the  earliest  possible 
date  urge  the  issuing  of  a  special  patent  for  the 
lands  selected"  (R,  1475).  He  added,  however,  that 
the  lands  in  30-23,  together  with  those  in  a  great 
many  other  towmships,  had  been  suspended  from  dis- 
posal by  telegraphic  order  of  the  Commissioner  of 
the  General  Land  Office  of  February  28,  1900,  ''upon 
allegations  tJiat  the  said  townships  contained  petro- 
leum'^ (R.  1476) ;  that  upon  inquiry  he  had  found 
that  this  withdrawal  had  not  been  revoked  "and 
will  not  be  until  a  special  agent  has  reported  that 
said  lands  are  not  petroleum  lands",  but  that,  if 
Eberlein  would  write  him  "just  w^hat  lands  he  de- 
sires to  select  in  township  30  S.,  Range  23  East,"  he 
could  ask  the  Commissioner  of  the  General  Land 
Office  to  direct  special  agent  Ryan  to  examine  said 
lands  as  quickly  as  possible  and  make  special  report 
as  to  their  character  (R.  1476).  He  presumed  that 
the  Register  and  Receiver  would  not  approve  the 
selection  because  of  the  outstanding  order  of  Febru- 
ary 28,  1900,  and  enclosed  a  copy  of  his  letter  to  Mr. 
Kruttschnitt  to  be  handed  to  Eberlein.  On  the  wit- 
ness stand  Mr.  Kruttschnitt  denied  that  he  knew 


326 

anything  whatever  about  these  lands ;  but  this  state- 
ment does  not  appear  to  agree  with  his  acts  at  the 
time  of  the  proceedings  which  resulted  in  the  patent. 

On  October  19,  1903,  Chambers  wired  Eberlein  to 
select  the  lands  regardless  of  their  suspension  (R. 
1479)  ;  and  on  October  24, 1903,  he  again  wrote  Eber- 
lein suggesting  that,  if  the  Eegister  and  Receiver 
refused  to  accept  the  list  he  should  take  an  appeal 
to  the  Commissioner  (R.  1480-1).  Thus,  it  is  shown 
that  Mr.  Kruttschnitt's  action  is  contradictory  of 
his  statement  as  a  witness  in  1912  that  he  was 
whollv  imorant  of  any  knowledge  of  the  lands  in 
suit.  On  October  9,  1903,  Mr.  Kruttschnitt  thought 
so  much  of  these  lands  that  he  wrote  the  quoted  let- 
ter to  Mr.  Chambers  while  en  route  and  requested 
the  latter  to  endeavor  to  secure  special  attention  to 
patenting  them. 

During  the  correspondence  to  which  reference  has 
just  been  made  George  A.  Stone  was  busy  preparing 
list  No.  89  following  Dumble's  visit  to  the  land 
office  of  the  railroad  on  which  he  pressed  the  selec- 
tion of  the  lands  in  suit.  Eberlein  stated  that  he 
knew  nothing  whatever  of  the  lands  and  Stone,  his 
assistant,  had  never  been  on  them,  nor  had  Eberlein 
sent  anyone  out  to  examine  them  before  making  his 
non-mineral  affidavit.  Do  not  these  facts  of  them- 
selves point  to  the  belief  of  Dumble  in  the  mineral 
character  of  the  lands  and  to  the  truth  of  Stone's 
statement  that  he,  Duml)le,  pressed  their  selection 
for  that  reason?    At  that  very  time  Dumble  had  in 


327 

his  possession  Treadwell's  map   of   September  17, 

1902,  Exhibit  115,  showing  withdrawals  because  in 
or  near  oil  territory  of  lands  surrounding  on  all 
sides  the  lands  in  suit;  Owen's  report  of  March  25, 

1903,  in  which  he  stated  that  the  oil  sands  were  ex- 
posed in  several  places  and  that  producing  wells 
ought  to  be  found  along  the  exposure;  and  Exhibit 
157  delineating  the  Elk  Hills  anticline  across  the 
lands  in  suit.     Other  work  in  Eberlein's  office  was 
placed  aside  so  that  list  89  could  be  promptly  pre- 
pared and  a  few  days  later,   September  26,   1903, 
Eberlein   wrote   Kruttschnitt   that   he   expected   to 
tender  a  selection  list  of  the  lands  in  suit  within  a 
week  and  suggested  that  he  ask  that  special  atten- 
tion be  given  to  the  patenting  of  that  list,  despite 
which  Mr.  Kruttschnitt  testified  that  he  knew  no 
more  about  these  lands  than  if  they  were  at  the 
North   Pole.     Immediately  thereafter,   that   is,   on 
November  7,   1903,   Eberlein,   because   required   by 
pertinent   regulation   of   the   General   Land   Office, 
attached  to  the  list  an  affidavit  in  which  he  falsely 
swore  that  he  had  caused  the  lands  to  be  examined 
by  agents  and  employees  of  the  company  and  that 
none  of  them  was  mineral  land.    The  list  in  question, 
accompanied  by  the  non-mineral  affidavit,  was  then 
tendered  to  the  Eegister  and  Eeceiver  at  Visalia  and 
was  received  by  them  November  14,  1903  (R.  3752). 
It  is  again  pointed  out  that  Eberlein  on  the  witness 
stand  admitted  that  he  had  never  examined  the  lands 
nor  instructed  anyone  else  to  do  so  and  personally 
knew  nothing  whatever  of  their  character  (R.  1088). 


328 

Departing  for  a  moment  from  the  chronological 
order  of  the  events  now  being  outlined,  attention  is 
directed  to  a  letter  of  December  10,  1903,  from  Eber- 
lein  to  Chambers  in  which  the  former  wrote  as 
follows : 

"I  am  particularly  anxious  in  regard  to  this 
list  as  the  lands  adjoin  the  oil  territory  and  Mr. 
Kruttschnitt  is  very  solicitous  in  regard  to  it." 
(R.  1577,  bottom  of  page.) 

The  reference  is  to  selection  list  89  and  the  lands 
in  suit  and  this  contemporary  statement  illy  com- 
ports with  the  subsequent  pose  of  ignorance  on  the 
part  both  of  Mr.  Eberlein  and  Mr.  Kruttschnitt. 

On  November  17,  1903,  as  expected,  the  Register 
and  Receiver  rejected  the  list  because  the  township 
containing  the  lands  therein  described  had  been  sus- 
pended from  acquisition  (R.  3756).  On  November 
30,  1903,  Chambers  asked  the  General  Land  Office 
to  have  an  investigation  made  (R.  1483)  and  wired 
Eberlein  on  the  same  date  recommending  an  appeal 
to  the  Commissioner  of  the  General  Land  Office 
from  the  rejection  by  the  Register  and  Receiver  at 
Visalia  of  the  list  in  question  (R.  1481). 

On  December  10,  1903,  Chambers  wired  Eberlein 
that  the  Commissioner  of  the  General  Land  Office 
had  on  that  date  directed  an  examination  of  the 
lands  in  suit  to  be  made  and  that  he  presumed  the 
special  agent  was  ^Ir.  Ryan,  but  he  was  not  advised 
positively  of  this  (R.  1482).  Here  we  find  the 
Washington  attorney  of  the  Southern  Pacific  Com- 


329 

pany  and  the  Southern  Pacific  Railroad  Company 
successfully  predicting  ^Yho  would  be  the  special 
agent  chosen  by  the  Commissioner  to  make  report. 

On  the  same  date,  December  10,  1903,  Eberlein 
wrote  Chambers  the  letter  already  referred  to  in 
which  he  stated  that  he  was  particularly  anxious  in 
regard  to  list  89  "as  the  lands  adjoin  the  oil  terri- 
tory and  Mr.  Kruttschnitt  is  very  solicitous  in  re- 
gard  to  it''.  This  letter  is  set  out  on  pages  1577, 
1578,  1579  and  1580  of  the  record.  It  was  written  a 
year  and  two  da^^s  before  the  date  of  the  assailed 
patent  and  its  contents  demonstrate  that  both  Eber- 
lein and  Kruttschnitt  believed  in  the  oil  character 
of  the  lands  thus  sought  to  be  secured  by  appellants 
as  agricultural  lands,  when  in  truth  and  in  fact  they 
were  and  Kruttschnitt  and  Eberlein  verily  believed 
them  to  be  oil  lands.  The  taking  of  testimony  in 
this  case  began  Ai^ril  16,  1912,  and  consumed  more 
than  a  year,  ending  in  December,  1913.  As  early  as 
Julv,  1912,  the  letter  now  under  review  was  de- 
manded  by  the  govermnent  under  subpoena  duces 
tecum,  but  it  was  not  produced  until  August  2,  1913, 
several  months  after  Mr.  Kruttschnitt  was  on  the 
stand  as  a  witness  for  appellants.  In  July,  1912, 
Mr.  A.  A.  Hoehling,  Jr.,  who  had  succeeded  D.  A. 
Chambers,  then  deceased,  as  the  local  attorney  of 
appellants  in  Washington,  D.  C,  was  placed  under 
subpoena  to  produce  all  the  correspondence  between 
Chambers  and  officials  of  the  railroad  company  re- 
lating to  the  selection  of  these  lands  which  were  then 
in  Hoehling 's  custody  (R.  1463).    Prior  to  that  time 


330 

Mr.  Hoeliliiig  had  not  appeared  as  an  attorney  in 
this  case;  but  on  July  30,  1912,  on  motion  of 
Mr.  Charles  R.  Lewers,  Mr.  Hoehling  was  entered 
as  attorney  for  appellants  other  than  the  Equitable 
Trust  Company  of  New  York  (R.  1339-40).  This 
was  while  evidence  was  being  taken  in  the  city  of 
Washington  and  the  record  will  show  that  Mr.  Hoeh- 
ling attended  as  counsel  the  hearings  in  that  city. 
On  August  2,  1913,  it  is  shown  on  page  1478  of  the 
record  that  this  letter  of  December  10,  1903,  was 
the  subject  of  a  colloquy  between  counsel  for  the 
government  and  counsel  for  appellants,  Mr.  Hoeh- 
ling stating  that  he  had  turned  that  letter  over  to 
Mr.  Lewers  and  that  Mr.  Lewers  afterwards  ad- 
vised him  that  he  had  sent  the  letter  out  to  San 
Francisco.  This  statement  was  made  in  the  presence 
of  Mr.  Lewers  and  was  not  denied  bv  him;  so  that 
it  thus  appears  that  a  letter  which  one  of  counsel 
for  appellants  was  under  subpoena  to  produce  was 
delivered  to  another  of  appellants'  counsel  and 
mailed  by  him  to  a  city  three  thousand  miles  distant 
from  that  in  which  testimony  was  being  taken  and 
which  the  other  of  counsel  was  under  subpoena  to 
produce.  (The  following  facts  do  not  appear  in  the 
transcript  of  the  record  in  this  case,  but  they  do 
appear  in  the  original  record  as  taken  by  the  special 
examiner  and  it  is  the  purpose  of  the  government 
to  ask  counsel  for  appellants  to  stipulate  that  they 
be  considered  as  in  the  transcript.  On  page  2871 
of  the  original  record  it  appears  that  on  December  4, 
1912,  counsel  for  the  government  again  demanded 
the  production  of  this  letter  from  Eberlein  to  Cham- 


331 

bers  of  December  10,  1903,  and  that  Mr.  Chas.  E. 
Lewers,  counsel  for  appellants,  stated  that  he  had 
not  seen  the  letter  since  August  2,  1912.  Pages  6286 
and  6287  of  the  original  record  show  that  on  April  7, 
1913,  immediately  before  Mr.  Kruttschnitt  took  the 
stand  as  a  witness  in  behalf  of  apx3ellants,  counsel 
for  the  government  called  upon  counsel  for  appel- 
lants to  produce  the  letter  in  question  which  had 
been  delivered  to  him  in  Washington  in  August, 

1912,  by  Hoehling  and  which  counsel  for  appellants 
had  promised  to  produce;  so  that  at  the  very  time 
when  it  was  desirable  to  examine  Mr.  Kruttschnitt 
concerning  the  reference  in  the  letter  to  him  it  was 
withheld.  Pages  6611  and  6616  of  the  original 
record  show  that  this  demand  was  again  repeated 
on  June  2,  1913.)  As  a  matter  of  fact  the  letter  was 
not  produced  until  August  2,  1913,  a  full  year  after 
the  time  when  its  production  was  required  by  suh- 
poena  duces  tecum  upon  Mr.  Hoehling  who,  instead 
of  producing  it,  delivered  it  to  Mr.  Charles  E. 
Lewers  who  in  turn  mailed  it  from  Washing-ton  to 
San  Francisco  and  did  not  produce  it  until  August  2, 

1913.  The  record  of  its  production  is  noted  on 
page  1676  of  the  record  where  the  date  of  the  pro- 
duction is  stated  as  August  2,  1912.  This  will  be 
conceded  by  appellants  to  be  an  error  and  that  the 
date  should  be  1913  and,  apart  from  concession,  this 
sufficiently  appears  from  reading  the  first  three  lines 
of  page  1577  of  the  record  where  counsel  for  appel- 
lants is  noted  as  sajdng: 

"This  is  offered  at  this  time  because  of  the 
fact  that  it  is  a  part  of  the  correspondence  which 


332 

was  introduced  in  evidence  at  Washington  in 
August  of  last  year/' 

The  letter  of  December  10,  1903,  whose  production 
required  so  much  of  time  and  caused  so  much  of 
trouble  and  pains  and  effort,  was  written  by  Eber- 
lein  a  month  after  he  had  filed  the  first  selection 
list  in  this  case  and  two  or  three  months  after 
Mr.  Dumble,  according  to  George  A.  Stone,  went 
into  Eberlein's  office  and,  in  the  presence  of  Stone, 
pressed  the  selection  of  the  lands  in  suit.  The  fol- 
lowing is  the  letter  in  full : 

''(6-15-03-2M)  Ansd  Dec  16  SC  19  B 

"Laxd  Departmext  of  the 

"SOUTHERX   PaCIEIC   RaILROAD    COMPANY. 

San  Francisco,  Cal. 
•'December  10,  1903. 

•'Subject:  Visalia  Main  Line  Indemnitv 
List  No.  89. 


(I 


Mr.  D.  A.  Chambers, 
McGill  Building,  908  G  St.,  N.  AV., 
"Washington,  D.  C. 

"Dear  Sir: 

""Referring  to  our  correspondence  in  regard 
to  this  matter,  I  beg  to  say  that  under  date  of 
December  9th,  :\[r.  AYm.  F.  Herrin  advises  me 
that  he  has  taken  an  appeal  from  the  Register 
and  Receiver's  rejection  of  Main  Line  In- 
demnity List  No.  89,  recently  filed,  and  that  a 
copy  of  his  appeal  has  been  forwarded  to  you. 

"Tn  this  letter,  evidently  written  by  Air. 
Singer,  occasion  is  taken  to  criticise  somewhat 
the  proceeding  of  this  department.  The  follow- 
ing appears  in  his  letter: 


333 


a  i\ 


The  best  course,  it  seems  to  me,  was  to  ac- 
company the  selection  list  with  affidavits  setting 
forth  that  the  lands  are  vacant  and  unappro- 
priated non-mineral  lands,  and  asking  that  the 
order  of  suspension  be  released.  Such  affidavits 
and  petition  would,  I  believe,  have  procured  a 
hearing  to  be  ordered,  and  if  sustained  should 
entitle  our  list  to  nunc  pro  tunc  filing  but  if  not, 
still  our  list  would  be  ordered  filed  simultane- 
ousty  with  the  release  of  suspension;  and  pen- 
dency of  our  selection  would  cut  off  inter- 
mediate settlement.' 

"It  is  possible  that  Mr.  Herrin  has  written 
you  in  the  same  tenor,  when  sending  you  copy 
of  the  appeal. 

"This  is  a  matter  of  practice,  as  to  which  I 
am  willing  to  act  under  advice. 

"It  seems  to  me,  however,  that  the  first  and 
most  necessary  step  to  take  was  to  file  our  list, 
as  advised  by  you. 

"We,  of  course,  knew  of  the  suspension,  and 
if  there  is  any  virtue  in  the  filing  of  an  affi- 
davit I  don't  see  why  it  cannot  be  done  now  as 
well  as  at  the  time  of  the  filing  of  the  list.  Will 
you  give  me  the  benefit  of  your  advice  as  to  what 
is  best  to  be  done  '^ 

"I  am  particularly  anxious  in  regard  to  this 
list  as  the  lands  adjoin  the  oil  territory,  and 
Mr.  Kruttschnitt  is  very  solicitous  in  regard 
to  it. 

"I  have  had  in  mind  the  suggestion  you  made 
sometime  ago  in  regard  to  inducing  Mr.  E.  C. 
Ryan,  special  agent  at  Los  Angeles,  to  make  his 
report. 

"I  am  not  acquainted  with  Mr.  Eyan,  and  it 
is  a  matter  for  serious  consideration  as  how  to 
approach  him.     It  would  not  do,  certainly,  to 


334 

ask  for  a  report  recommending  the  release  of 
the  lands  selected  by  us,  from  suspension.  In 
my  opinion  it  would  not  be  politic  to  ask  for 
a  "release  in  any  particular  district.  Mr.  Ryan 
would,  in  all  probability,  jump  at  the  conclusion 
that  the  railroad  had  some  special  information 
in  regard  to  that  district,  and  the  result  would 
probably  be  that  our  request  would  have  the 
opposite  effect  from  that  desired. 

"All  that  I  could  do  would  be  in  a  general 
way  to  ask  him  to  submit  a  report  of  the  lands 
covered  by  the  order  of  suspension,  which,  as 
you  know,  embraces  a  very  large  area. 

"How  would  it  do  to  ask  the  Department  to 
suggest  to  Mr.  Ryan  that  he  make  a  report  of 
so  much  of  the  "lands  within  the  suspension 
limits  as  he  has  examined  up  to  this  time?  It 
might  be  that  such  a  report  would  cover  the  very 
district  in  which  we  are  operating,  and  we  would 
then  be  relieved  from  the  danger  of  having 
called  particular  attention  to  any  locality. 

"There  is  a  point  of  land  office  practice  as  to 
which  I  would  like  your  opinion. 

"Since  succeeding  Mr.  Madden  two  lists  have 
been  filed  by  this  department  and  rejected.  In 
both  cases,  "following  out  what  appears  to  have 
been  the  rule  in  this  department  heretofore,  I 
have  written  to  the  Law  Department,  stating 
the  facts  of  filing,  rejection,  etc.,  and  asked 
that  a  proper  appeal  be  drawn  and  sent  to  me 
for  execution  and  filing.  In  both  cases  the  Law 
Department  has  not  only  drawn  but  has  per- 
fected the  appeal  and  filed  it  without  reference 
to  this  department.  I  do  not  know  that  there 
is  any  point  involved,  and  the  only  reason  that 
I  am  asking  for  your  opinion  is  that  heretofore 
I  find,  by  reference  to  our  office  fik^s,  the  appeal 
has  been  drawn  in  the  Law  Department  and 
signed  by  the  Land   Agent,  and  by  hun   for- 


335 

warded  to  the  Register  and  Receiver  for  filing. 
It  is  mereh^  a  question  of  what  is  the  proper 
procedure. 

''I  presume  the  General  Land  Office  has  its 
own  ideas  as  to  what  officer  should  make  the 
appeal,  and  I  do  not  wish  to  vary  the  practice 
in  such  a  matter  as  to  confuse  the  Department, 
and  hereafter  lead  to  complications  which  might 
be  very  annoying. 

"Yours  very  truly, 

"Charles  W.  Eberlein, 
"Acting  Land  Agent." 

(Exhibit  199,  R.  1577-78-79-80.) 

The  W.  F,  Herrin  referred  to  in  the  first  para- 
graph of  the  letter  appears  elsewhere  in  the  record 
as  the  general  counsel  for  the  Southern  Pacific  Com- 
pany and  Chairman  of  the  Executiye  Committee  of 
the  Associated  Oil  Company,  one  of  its  subsidiaries. 

Attention  is  again  directed  to  the  pregnant  mean- 
ing of  the  following  paragraph: 

"I  am  particularly  anxious  in  regard  to  this 
list  as  the  lands  adjoin  the  oil  territory  and 
Mr.  Kruttschnitt  is  yery  solicitous  in  regard 
to  it." 

This  excerpt  would  be  a  sufficient  explanation  of 
the  fact  that  counsel  for  appellants  withheld  for  an 
entire  year  the  production  of  the  letter.  It  eyi- 
dences  Mr.  Eberlein 's  anxiety  and  Mr.  Kruttschnitt 's 
solicitude  and  demonstrates  that  the  anxiety  of  the 
one  and  the  solicitude  of  the  other  arose  out  of  the 
fact  that  the  "lands  adjoin  the  oil  territory".     The 


336 

circumstance  that  the  lands  adjoined  the  oil  terri- 
tory was  a  sufficient  explanation  and  evidently  El)er- 
lein  thought  that  a  word  to  a  wise  man  like  Chambers 
was  sufficient.  One  cannot  read  this  sentence  with- 
out concluding  that  Eberlein  himself  believed  the 
lands  to  be  oil  lands  or  escape  the  conviction  that  he 
spoke  authoritatively  when  he  attributed  to  Mr. 
Kruttschnitt  solicitude  and  predicated  that  solicitude 
on  the  fact  that  the  lands  adjoin  the  oil  territory. 
And  these  are  the  lands  whose  selection  was  pressed 
by  Dumble.  These  are  the  lands  examined  by  Owen, 
Bumble's  associate  geologist,  as  shown  by  Exhibit 
157  and  the  report  or  letter  of  March  25,  1903,  and 
Treadwell's  map,  Exhibit  115,  all  of  them  in  the 
possession  of  Dumble  at  the  time  when  Stone  says 
he  pressed  their  selection.  It  will  later  appear  that 
Judge  W.  D.  Cornish,  vice-president  of  the  Southern 
Pacific  Company  and  president  of  the  Southern 
Pacific  Railroad  Company,  was  also  advertent  to 
the  proximity  of  the  selected  lands  to  the  oil  terri- 
tory and  the  import  thereof. 

It  is  not  out  of  place  here  to  note  the  fact  that 
counsel  for  appellants,  in  his  cross-examination  of 
Mr.  Kruttschnitt,  evidently  had  in  mind  the  lan- 
guage of  the  quoted  sentence,  as  shown  by  reference 
to  page  3094  of  the  record  where  Mr.  Kruttschnitt, 
while  the  letter  in  question  was  in  the  possession  of 
counsel  for  appellants  and  many  months  before  it 
was  produced,  disclaimed  that  he  was  solicitous  about 
obtaining  patent  to  the  lands  in  suit,  thus  entering 
in  advance  of  the  joroduction  of  the  letter  a  denial 


337 

of  the  state  of  mind  attributed  to  him  by  his  subor- 
dinate ;  but  the  fact  remains  that  the  record  of  IMr. 
Kruttschnitt's  state  of  mind  made  by  his  subor- 
dinate was  contemporary  with  the  events  under 
review,  while  Mr.  Kruttschnitt's  testimony  was 
matter  of  memory  of  those  events  eight  years  after 
they  had  transpired.  No  conceivable  motive  can  be 
attributed  to  Eberlein  for  representing  in  1903  that 
Mr.  Kruttschnitt  was  solicitous  and  it  is  evident 
that  he  wrote  what  he  understood  to  be  the  truth. 
Cerainly  his  contemporary  declaration,  made  when 
there  was  no  motive  to  do  other  than  speak  the 
truth,  stands  on  a  higher  plane  of  credibility  than 
the  denial  of  Mr,  Kruttschnitt  eight  years  later  when 
all  of  the  circiunstances  combined  to  influence  and 
prompt  a  contradiction. 

It  has  already  been  shown  that  the  selection  was 
rejected  by  the  Register  and  Receiver  because  of 
the  outstanding  suspension  of  February  28,  1900, 
and  that  Chambers  had  requested  that  a  special 
agent  be  instructed  by  the  Commissioner  to  make 
an  investigation  and  report.  In  the  letter  of  Decem- 
ber 10,  1903,  Eberlein,  having  in  mind  the  suggestion 
made  by  Chambers  in  regard  to  inducing  Ryan  to 
make  his  report,  replied  that  he  was  not  acquainted 
with  Ryan  and  that  it  was  a  matter  for  serious  con- 
sideration as  to  how  to  approach  him ;  that  it  would 
certainly  not  do  to  ask  for  a  report  recommending 
the  release  of  the  lands  in  suit  and  that  in  his 
opinion  it  would  not  be  politic  to  ask  for  a  release 
in  any  particular  district,  because  Ryan  would  in  all 


338 

probabilit}^  jump  at  tlie  conclusion  that  the  railroad 
had  some  sj)ecial  information  in  regard  to  that 
district.  These  are  Eberlein's  very  words:  "jum^D 
at  the  conclusion  that  the  railroad  had  some  special 
information  in  regard  to  that  district".  It  is  perti- 
nent to  inquire  why  he  entertained  such  a  fear  un- 
less there  was  basis  for  it.  Eberlein  then  proceeds 
to  suggest  that  it  might  be  well  to  ask  the  depart- 
ment to  suggest  to  Ryan  that  he  make  a  report  of 
so  much  of  the  lands  within  the  suspension  limits  as 
he  had  examined  up  to  that  tune,  since  such  a  report 
might  over  the  A'ery  district  involved  and  would 
thereby  relieve  them  from  the  danger  of  having 
called  particular  attention  to  any  locality.  Could 
one  employ  plainer  language  to  impart  guilty  knowl- 
edge and  fear  of  danger?  What  danger  could  there 
be  unless  there  was  an  effort  to  do  that  which  was 
unlawful  and  wrongful?  It  is  manifest  that  both 
Eberlein  and  Chambers  recognized  the  peril  in  which 
they  and  the  selection  list  would  be  placed  if  Eyan's 
attention  were  directed  to  the  lands  in  suit  and 
Eberlein  must  manifestly  have  felt  that  such  action 
would  bring  about  a  result  opposite  in  etfect  to  that 
desired. 

Ryan  made  his  first  report  on  Januarj^  22,  1904, 
recommending  that  the  lands  in  suit  be  relieved  from 
suspension.  At  the  date  of  this  report  the  appeal 
taken  by  the  railroad  company  was  still  pending  in 
the  General  Land  Office,  but  on  receipt  of  Ryan's 
report  the  order  of  suspension  was  revoked  Feb- 
ruary 20,  1904,  as  to  the  lands  in  suit  by  order  of 


339 

the  Commissioner  sent  to  and  received  by  the 
Eegister  and  Receiver  at  Visalia  February  26,  1904 
(E.  3758).  The  railroad  thereupon  abandoned  its 
appeal.  Previously,  on  December  16,  1903,  W  .F. 
Herrin,  chief  counsel  of  the  Southern  Pacific  and 
Southern  Pacific  Railroad  companies  (R.  1348),  who 
had  taken  an  appeal  in  behalf  of  the  railroad  com- 
pany, had  been  notified  by  Chambers  that  the  lands 
in  suit  had  been  suspended  in  1900  because  of  alle- 
gations that  they  contained  oil,  but  that  he  was 
endeavoring  to  have  the  order  revoked  and  on 
November  30  had  requested  the  Commissioner  to 
direct  a  special  agent  to  examine  and  report  on 
them  and  had  been  advised  that  this  was  done.  The 
letter  from  Chambers  to  Herrin  follows : 

"Visalia  Main  Line  Indemnity  List  No.  89, 
Lands  in  Tp.  30  S.,  R.  23  E.,  MDM. 

"December  16,  1903. 
"Hon.  W.  F.  Herrin, 

' '  San  Francisco,  Cal. 

"Dear  Sir: — 

"I  have  vour  letter  of  the  9th  instant,  with 
copy  of  an  appeal  taken  on  behalf  of  the 
Southern  Pacific  Railroad  Company  from  the 
rejection  by  the  Register  &  Receiver  of  the 
above  list,  on  the  ground  that  the  lands  were 
suspended  from  disposition  by  Commissioner's 
telegram  of  February  28,  1900. 

"The  Register  &  Receiver  in  rejecting  said 
list  conformed  to  the  rulings  of  the  Department 
in  like  cases. 

"This  blanket  suspension  of  February  28, 
1900,  on  allegations  that  a  large  area  of  land  in 
California  contained  petroleum,  we  endeavored 


340 

to  have  the  late  Commissioner  Hermann  revoke, 
but  the  best  he  would  do  was  to  direct  his  special 
agents  to  examine  and  report  on  all  lands  within 
railroad  limits  in  Southern  California.  We 
have  never  been  able  to  learn  that  any  report 
w^as  ever  made  by  special  agents. 

"As  to  the  lands  on  this  list  89,  on  the  30tli 
ult.,  I  requested  the  Commissioner  to  have  an 
investigation  of  them  made  immediately  by  a 
Special  agent,  and  on  the  10th  inst.,  he  advised 
me  that  a  special  agent  had  been  instructed  to 
examine  and  report  on  them.  On  the  same  day 
I  advised  Mr.  Eberlein  of  said  action  of  the 
Commissioner. 

"It  did  not  seem  advisable  to  me  that  the 
company  at  this  time  should  take  steps  to  get  a 
hearing  as  to  these  lands,  for  if  the  special  agent 
reports  favorably,  the  lands  would  be  released 
from  susj^ension  without  expense  to  the  com- 
pany, and  if,  as  to  any  of  the  lands,  his  report 
shall  be  adverse,  it  will  then  be  time  enough  for 
us  to  apply  for  a  hearing  as  to  such  lands  with 
submission  of  affidavits  in  support  of  our  appli- 
cation. 

"I  will  look  after  this  appeal  when  received 
at  the  General  Land  Office  from  the  Visalia 
local  office. 

"Yours  trulv, 

(Signed)     "D.  A.  Chambers." 
(R.  1483-84.) 

It  is  to  be  noted  that  Chambers,  Washington  coun- 
sel of  appellants,  did  not  think  it  "advisable  that 
the  company  at  this  time  should  take  steps  to  get  a- 
hearing   as   to   these   lands".      On   the    same   date, 


341 

December  16,  1908,  Chambers  wrote  a  letter  to  Eber- 
lein  in  which  he  warned  him,  if  he  met  Ryan,  to 
merely  say  that  it  wonld  be  acceptable  to  the 
company  if  Ryan  would  make  a  speedy  report 
(R.  1484-5) — a  warning  in  line  with  fears  expressed 
in  a  previous  letter  from  Eberlein  to  Chambers, 
already  noted,  to  the  evident  effect  that  Ryan  might 
discover  the  ulterior  motive  that  underlaid  their 
desire  to  secure  these  lands. 

January  13,  1904,  Chambers  again  wrote  Eberlein 
a  letter  in  which  he  referred  to  the  latter 's  letter  to 
him  of  January  6  in  which  he  was  taken  to  task 
for  calling  the  attention  of  the  Commissioner  spe- 
cifically to  the  lands  in  suit ;  for  Chambers  says : 

"I  received  your  letter  of  the  6th  instant,  in 
which  you  say  that  my  action  in  respect  to  the 
lands  in  the  above  list  89  has  not  been  in  accord- 
ance with  your  suggestion  in  your  letter  of  the 
10th  ult." 

It  is  evident  that  this  was  the  letter  in  which 
Eberlein,  fearing  that  to  do  so  would  result  in  the 
discovery  by  the  Commissioner  of  the  real  reason 
for  which  they  were  desired,  warned  Chambers  not 
to  ask  for  a  special  report  upon  the  lands  in  suit. 
Chambers  continues:  "Please  bear  in  mind  that 
these  two  requests  for  the  examination  of  specified 
lands  by  a  special  agent  were  made  and  the  action 
of  the  Commissioner  taken  before  I  received  your 
letter  of  December  10  to  which  you  now  call  atten- 
tion. Since  the  receijDt  of  your  letter  of  the  tenth 
of  December  I  have  not  made  and  shall  not  make 


342 

any  request  for  examination  by  a  special  agent  of 
any  of  the  suspended  lands  within  the  grant  of  the 
railroad  company,  unless  you  so  request."   (R.  1487.) 

Further  along  he  writes:  "If  I  had  know^n  your 
views  when  writing  my  letter  of  October  7  and 
November  30  to  the  Commisioner,  I  could  have  made 
said  letters  conform  thereto  and  asked  action  upon 
all  suspended  lands  without  specification  of  any. 
But  the  Commissioner's  letter  of  December  10  to 
special  agent  Ryan^  which,  confidentially^  I  have 
been  allowed  to  read,  suggests  that  he  now  report 
whether  there  is  any  necessity  for  the  continuance 
of  the  suspension  of  any  land  in  three  districts ;  and 
this  is  apparently  the  kind  of  official  action  that  you 
desire."    (R.  1488.) 

It  has  already  been  pointed  out  that  Mr.  Hoehling 
was  subpoenaed  to  produce  all  the  correspondence 
between  Chambers  and  Eberlein  and  it  is  significant 
that  this  letter  of  January  6,  referred  to  in  the  fore- 
going letter,  in  which  Eberlein  evidently  chided 
Chambers  for  his  indiscretion  in  directing  the 
attention  of  the  Commissioner  to  the  lands  in  suit, 
was  not  produced. 

Because  section  29  of  the  lands  in  suit  w^as  in- 
advertently omitted  in  the  order  revoking  the  sus- 
pension of  the  lands  from  disposition,  the  Com- 
missioner decided  to  relieve  it  also  and  that  fact 
was  reported  to  Eberlein  by  Chaml)ers  on  February 
13,  1904  (R.  1490-1). 


343 

By  letter  of  March  8,  1904,  Eberlein  called  Cham- 
bers' attention  to  some  error  in  selection  list  89  of 
the  lands  in  suit.  This  letter  was  not  produced  by 
appellants  and  is  not  in  the  record,  but  it  is  clear 
from  Chambers'  letter  to  Eberlein  of  March  15, 
1904  (R.  1495),  which  is  in  terms  a  reply  thereto, 
that  Eberlein  again  urged  prompt  attention  to  the 
patenting  of  the  list.  In  this  reply  Chambers  prom- 
ised that  he  would  give  due  attention  to  the  patenting 
of  the  list,  but  that  he  could  not  make  any  progress 
with  it  until  the  May  returns  from  the  Visalia  office 
had  been  received;  and  Chambers  advised  Eberlein 
not  to  submit  a  new  list  because  of  the  great  amount 
of  trouble  which  they  had  had  with  the  pending 
list  (R.  1497).  This  letter  was  written  seven  days 
subsequent  to  a  personal  visit  made  by  Eberlein  to 
Chambers  in  Washington,  as  is  shown  by  the 
fact  that  a  telegram  from  Eberlein  to  Stone  of 
March  8,  1904,  was  produced  from  the  letter-press 
of  D.  A.  Chambers  by  his  successor,  Mr.  Hoehling 
(R.  1492-3).  It  could  not  have  been  in  Chambers' 
letter-press  unless  it  was  sent  from  his  office  by 
Eberlein.    That  document  is  as  follows: 

"Telegram: 

"March  8,  1904. 
"George  A.  Stone, 
"Land  Department  Southern 

Pacific  R.  R., 
"Wells  Fargo  Express  Bldg., 
"San  Francisco,  Cal. 

"Referring  to  your  letter  February  29th  to 
Mr.  Chambers  regarding  Visalia  Indemnity  List 


344 

eighty-nine :  Do  not  wait  on  motion  of  Register 
and  Receiver  at  Visalia,  but  take  active  steps  to 
have  list  eighty-nine  approved  as  directed  by 
Commissioner's  letter.  Notify  Mr.  Chambers 
by  wire  and  by  letter  of  date  of  approval  of 
Register  and  Receiver  and  date  when  they 
returned  the  list  to  the  Commissioner.  Act 
promptly. 

(Signed)     "Charles  W.  Eberlein." 

"D.H.  2083 
(R.  1493.) 

This  brings  the  record  down  to  March  22,  1904, 
when  special  agent  Ryan  submitted  an  additional 
report  involving  all  of  the  lands  which  he  had  been 
originally  instructed  to  investigate,  45  townships 
including  the  lands  in  suit,  in  which  report  he  recom- 
mended that  all  lands  on  which  there  were  no  oil 
wells  producing  oil  in  paying  quantities  be  relieved 
from  suspension  (R.  1560-1-2-3-4-5-6-7). 

Thereafter  the  railroad  company  through  its 
land  agent  on  June  20,  1904,  again  submitted  a  false 
and  fraudulent  affidavit  in  support  of  its  application 
for  selection  of  the  lands  in  suit  (R.  1572-3).  This 
affidavit  was  tendered  with  a  new  selection  of  the 
same  lands  (R.  1572-3)  and  it  was  made  after  the 
Register  and  Receiver  had  required  publication  of 
the  list  because  within  six  miles  of  mining  claims 
(R.  3776-7).     Following  is  the  affidavit: 

"City  and  County  of  San  Francisco — ss. 
"State  of  California, 

"Charles  W    Eberlein,  being  duly  sworn  de- 
poses and  says  that  he  is  the  acting  land  agent 


345 

of  the  Southern  Pacific  Eailroad  Company,  that 
the  lands  selected  by  the  Southern  Pacific  Rail- 
road Company  for  patent  in  its  Visalia  Indem- 
nity Limits  List  No.  89  have  been  carefully 
examined  by  the  agents  and  employees  of  said 
Company  as  to  their  mineral  or  agricultural 
character,  and  that,  to  the  best  of  his  knowledge 
and  belief,  none  of  the  lands  returned  in  said 
List  No.  89  are  mineral  lands. 

(E.  1572-3.) 

(Signed)     "Charles  W.  Eberlein. 

The  new  list  No..  89  of  June  20,  1904,  was  for- 
warded by  the  Register  and  Receiver  to  the  General 
Land  Office  on  July  14,  1904,  and  received  at  the 
General  Land  Office  July  20,  1904  (R.  1572-3; 
3776-7). 

It  has  already  been  shown  herein  in  connection 
with  the  History  of  List  89,  at  pages  5  et  seq.  of 
this  brief,  that  a  third  list  was  filed  September  6, 
1904,  because  of  failure  of  the  former  list  to  conform 
to  the  regulations  of  the  General  Land  Office  in  the 
matter  of  assignment  of  base  lands.  Accordingly, 
on  August  31,  1904  (R.  3850-1),  another  non-mineral 
affidavit  was  made  and  sworn  to  by  Eberlein  as 
acting  land  agent  and,  accompan3dng  the  new  and 
revised  list,  was  filed  with  the  Register  and  Receiver 
on  September  6,  1904  (Exhibit  12-R;  R.  3772).  The 
affidavit  in  question  follows: 

"(10-22-03-100)     Form  3304. 

"State  of  California, 
"City  and  County  of  San  Francisco— ss. 

"Charles  W.  Eberlein  being  duly  sworn  de- 
poses and  says  that  he  is  the  acting  land  agent 


346 

of  the  Southern  Pacific  Railroad  Company,  that 
he  has  caused  the  lands  selected  in  said  Com- 
pany's List  No.  89  to  be  carefully  examined  by 
the  agents  and  employees  of  said  company  as 
to  their  mineral  or  agricultural  character,  and 
that  to  the  best  of  his  knowledge  and  belief,  none 
of  the  lands  returned  in  said  list  are  mineral 
lands. 

(Ink  handwriting)        "Charles  W.  Eberlein. 


The  Kern  Trading  and  Oil  Company  lease. 


The  eyidence  now  to  be  reyiewed  will  show  that 
on  August  2,  1904,  a  lease  transferring  to  the  Kern 
Trading  and  Oil  Company,  organized  as  the  fuel 
dej^artment  of  the  Southern  Pacific  Company,  35,600 
acres  of  oil  lands  including  one  section  in  the  yery 
township  in  which  the  lands  in  suit  are  situate  and 
actually  adjoining  the  lands  then  under  selection 
but  not  yet  patented,  was  presented  to  Eberlein  for 
execution  in  behalf  of  the  Southern  Pacific  Eailroad 
Company.  It  was  executed  in  his  presence  by  C.  H. 
Markham  (R.  1100)  in  behalf  of  the  Kern  Trading 
and  Oil  Company  of  which  he  was  president,  he 
being  also  general  manager  of  the  Southern  Pacific 
Company.  Eberlein  at  once  recognized  the  anoma- 
lous position  in  which  the  execution  of  such  a  lease 
for  oil  purj^oses  would  place  one  who  had  signed 
and  tendered  a  non-mineral  affidayit  in  support  of  a 
selection  of  lands  adjoined  by  the  lands  thus  sought 
to  be  transferred  for  oil  deyelopment  purposes.  He 
noticed  the  signature  of  E.  T.  Dumble,  the  Southern 
Pacific  geologist;  endorsed  on  the  lease  and  certify- 


347 

ing  to  the  correctness  of  the  description  of  the  lands 
described  therein  (R.  1100).  Eberlein  stated  that 
Dmnble's  certification  was  a  surprise  to  him,  since 
he  did  not  know  that  Dumble  knew  anything  at  all 
about  the  grant  lands  of  the  Company  (R.  1140) 
and  aroused  in  his  mind  a  suspicion  that  Dumble 
had  knowledge  of  the  lands  which  he,  Eberlein,  did 
not  have  (R.  1307-8).  This  was  four  months  before 
the  patent  was  issued  and  while  the  application  was 
under  consideration  in  the  Land  Office;  and  it  is 
evident  that  the  impression  that  Eberlein  meant  to 
produce  was  that  Dumble  knew  that  the  lands  in  suit 
were  oil  lands,  but  that  he,  Eberlein,  did  not  know  it. 
The  fact,  however,  that  this  testimony  was  given  by 
Eberlein  a  year  prior  to  the  production  in  evidence 
of  his  letter  of  December  10,  1903,  to  Chambers,  the 
Washington  attorney  of  the  Southern  Pacific  inter- 
ests, and  before  Eberlein  had  any  knowledge  or  sus- 
picion that  its  contents  would  ever  be  disclosed  in 
this  suit,  is  significant.  In  that  letter,  it  will  be  re- 
called, it  appears  that  Eberlein  knew  the  oil  char- 
acter of  the  lands  in  suit  eight  months  before  the 
lease  in  question  was  tendered  for  his  signature  or 
certainly,  at  least,  that  he  was  particularly  anxious 
about  them  and  that  Mr.  Kruttschnitt  was  very 
solicitous  about  them  because  they  adjoined  the  oil 
territory. 

It  would  be  difficult  to  conceive  why  the  proximity 
of  lands  to  oil  territorv  would  be  the  occasion  of 
anxiety  or  solicitude  to  secure  them  unless  that 
proximity  imported  that  the  desired  lands  were  of 


348 

like  character  with  the  oil  territory.  Accordingly, 
it  may  be  safely  asserted  that,  while  Eberleiii  sought 
to  convey  the  impression  that  Bumble's  connection 
with  the  Kern  Trading  and  Oil  Company  lease 
aroused  a  suspicion  in  his  mind  that  Bumble  knew 
something  that  he,  Eberlein,  did  not  know,  as  a 
matter  of  fact  it  merely  added  fire  to  a  flame  which 
had  been  lighted  as  far  back  as  December  10,  1903. 

At  the  time  when  on  August  31,  1904,  Eberlein 
filed  the  third  and  last  non-mineral  affidavit,  he  had 
had  in  his  possession  for  nearly  a  month  the  lease 
to  the  Kern  Trading  &  Oil  Compan}^,  already  exe- 
cuted in  behalf  of  the  fuel  department  by  Mr.'  Mark- 
ham  and  awaiting  signature  in  behalf  of  the 
Southern  Pacific  Railroad  Company.  It  is  evident 
that  Eberlein  refused  to  sign  the  lease  because  the 
lands  sought  to  be  conveyed  for  oil  purposes  were 
adjoining  and  interspersed  with  the  lands  then 
under  selection  and  he  was  apprehensive  lest  the 
execution  by  him  of  the  lease,  at  the  time  when  he 
was  swearing  to  the  non-mineral  character  of  the 
lands  in  suit,  would,  if  made  public,  result  in  the 
conviction  that  he  had  filed  a  false  and  fraudulent 
non-mineral  affidavit.  Of  the  large  area  of  oil  lands 
2oroposed  to  be  thus  transferred  25,000  acres  were 
situate  adjacent  to  the  lands  in  suit  and  stretched 
along  the  eastern  base  of  the  main  chain  of  moun- 
tains from  a  point  northwest  of  McKittrick  as  far 
southeast  as  Sunset  and  scattered  along  which  at 
that  time  were  281  producing  oil  wells.  Notwith- 
standing   these    confessed    suspicions    of    Eberlein, 


349 

which  subsequenth'  led  to  a  series  of  letters  which 
will  be  set  out,  he  on  August  31,  as  already  noted, 
executed  the  non-mineral  affidavit  in  support  of  the 
selection  list  on  which  the  assailed  patent  finally 
issued  and  tendered  it  to  the  Register  and  Receiver 
at  Visalia  w^ho  received  it  on  September  6,  1904 
(R.  3772). 

Co-incident  with  these  events  and  ]3roceedings  in 
the  railroad  and  local  land  offices  there  was  a  con- 
versation in  the  field  to  which  Josiah  Owen  was  a 
party  which  confirms  the  charge  of  fraud.  S.  P. 
AYible  testified  that  "just  about  the  tune  of  the 
selection"  Owen  told  him  that,  if  the  railroad  com- 
pam^  selected  the  lands  in  township  30-23,  it  would 
be  selecting  mineral  lands  which  he  had  reported  to 
it  as  such  (R.  324-5). 

This,  then,  was  the  situation:  Although  he  had 
made  no  examination  of  the  lands  in  suit,  although 
he  himself  had  caused  none  to  be  made  by  others, 
although  he  susi3ected  that  Dumble,  Southern  Pacific 
geologist,  knew  something  about  them  that  he  didn't 
know,  although  he  was  apprised  that  the  lands  ad- 
joining and  in  the  immediate  vicinity  of  the  lands 
which  he  was  attempting  to  select  had  been  included 
in  a  lease  to  an  oil  development  company  and  al- 
though he  had  been  strenuously  protesting  against 
such  a  thing  because  of  the  damning  character  of  the 
evidence  which  it  would  create,  Eberlein  on  August 
31,  nevertheless,  again  coimnitted  himself  under  oath 
to  the  false  and  fraudulent  statements  contained  in 


350 

the  last  of  the  three  non-mineral  affidavits.  Great 
must  have  been  his  particular  anxiety  and  great 
must  have  been  Mr.  Kruttschnitt 's  solicitude  thus 
to  have  forced  him  to  assume  such  risks !  Great,  too, 
must  have  been  the  prize  involved  in  securing*  lands 
tvhich  adjoined  the  oil  territory! 

Alarmed  by  the  attempt  of  General  Manager 
Markham  and  his  other  superior  officers  to  force 
through  this  lease  with  consequent  stultification  to 
him,  Eberlein  on  September  3,  1904,  addressed  a 
letter  to  Judge  W.  D.  Cornish,  vice-president  of  the 
Southern  Pacific  Company  and  president  of  the 
Southern  Pacific  Railroad  Company,  in  v^hich  he 
very  boldly  announced  his  apprehension  of  the 
possible  discovery  by  the  United  States  Land  Office 
of  the  fraud  then  in  process  of  perpetration.  The 
letter  which  was  received  in  due  course  by  Judge 
Cornish  and  subsequently  became  the  subject  of  a 
confidential  and  personal  conference  in  New  York 
between  the  writer  and  the  addressee  follows : 

"Dictated. 

"Personal.  "September  3,  1904. 

"Hon.  W.  D.  Cornish, 

"Vice-President,  Southern  Pacific  Co., 

"120  Broadway,  New  York. 

"Dear  Sir: 

"As  you  are  aware,  the  Kern  Trading  &  Oil 
Company  has  been  organized. 

"I  am  totally  in  the  dark  as  to  the  objects, 
rights,  etc.,  of  this  corporation.  I  have  asked 
for  information  several  times,  but  it  has 
never   been   furnished   me.     /    iras   told   in   a 


351 

general  tvay  that  this  company  teas  organized 
for  the  purpose  of  taking  over  the  oil  lands  of 
the   Southern  Pacific  Railroad  Company   and 
operating  same.    A  lease  has  been  made    for 
the  term  of  ten  j^ears  from  the  first  of  Jan- 
uary, 1904,  with  a  renewable  term  of  the  same 
period.     The   lease   is  made  by  the   Southern 
Pacific  Railroad  Company  to  the  Kern  Trad- 
ing &  Oil  Company  and  covers  all  the  lands 
now   in   the    ownership   of   the    company   that 
either  are  or  are  supposed  to  he  oil  hearing. 
The   consideration  for  this  lease  is   a   royalty 
of    one-tenth   of    the    gross   product,    or,    'one- 
tenth  of  the  gross  amount  of  moneys  received 
from  the  sale  of  said  minerals,  substances  and 
products'.     This   lease   was   concocted   without 
any  reference  to  me,  and  it  has  now  been  sent 
over  for  me  to  execute  on  behalf  of  the  South- 
ern Pacific  Railroad  Company. 

"I  don't  know  that  there  is  any  particular 
objection  to  it,  as  perhaps  one-tenth  of  the 
product  mav  be  fair.  The  company  now  re- 
ceives one-fifth  in  some  cases  and  in  other 
cases  one-eighth,  and  this  is  at  a  still  lower 
rate.     However,  I  do  not  object  to  that. 

''I  am,  however,  somewhat  slow  about  sign- 
ing this  document  and  tying  the  railroad  com- 
panv  up  for  a  series  of  years.     Of  course,  I 
know  that  it  is  for  the  benefit  of  the  Southern 
Pacific    Company,    but    there    is    one    feature 
which   seems   to   me   to   be   important.      Inas- 
much as  the  lease  is  made  by  the  Land  Depart- 
ment,   and    the    head    of    that    department    is 
taking  the  responsibility  therefor,  it  does  not 
seem  proper  that   the   Southern  Pacific   Rail- 
road  Companv   shall  have   nothing   to   say   m 
regard   to   the    disposition   of    its   royalty   oil. 
The   lease  provides  that  the   oil  may  be   sold 
and  the   one-tenth  of  the  moneys  received  be 


352 

turned  over  to  the  Land  Department.  It 
leaves  the  matter  entirely  in  the  management 
of  the  Southern  Pacific  Compan}^  or  the  Kern 
Trading  &  Oil  Company,  I  don't  knov^  which. 
In  all  events  it  is  possible  for  some  man  not 
connected  with  the  Land  Department,  nor  with 
the  Southern  Pacific  Railroad  Company,  to 
make  a  price  on  royalty  oil  belonging  to  the 
railroad  company  and  sell  it.  There  is  no  pro- 
vision in  the  lease  that  the  price  to  be  received, 
in  case  the  oil  is  sold,  shall  be  the  market  price, 
or  any  other  price.  You  can  see  that  there  is 
a  wide  open  door  for  the  disposition  of  the 
Land  Department  property  at  ruinous  prices, 
thus  depriving  the  Land  Department  and  the 
bond  holders  of  a  fair  return  for  their  property. 

"I  feel  that  it  is  incumbent  upon  me  to  look 
somewhat  into  this  instrument  and  into  the 
future.  I  know  that  it  is  hardly  probable  but 
still  it  is  possible  that  the  control  of  this  oil 
company  may  by  some  contingency  pass  out  of 
the  present  hands,  and  if  it  should  fall  into 
hostile  control  the  railroad  company  would  get 
very  much  the  worst  of  it. 

"As  I  have  already  stated,  this  matter  has 
been  hatched  for  my  signature  without  sub- 
mission to  me  or  without  consultation.  I  know 
the  answer,  in  case  the  question  was  raised, 
would  be  that  it  is  all  a  family  matter  and  that 
I  need  not  concern  myself  about  it. 

''However,  I  take  it  that  you  are  somewhat 
interested  in  this  matter,  and  1  want  your  ad- 
vice as  to  what  you  think  would  better  be  done 
to  protect  us  against  future  complications.  Do 
you  think  it  would  be  wise  and  expedient  and 
would  it  serve  the  purpose  of  protection  if  I 
were  to  demand  action  of  the  Board  of  Directors 
of    the    Southern    Pacific    Railroad    Company 


353 

ratifying  and  confirming  the  lease  as  it  stands 
and  directing  the  land  agent  to  sign  the  lease? 

"It  seems  to  me  that  some  such  action  is  not 
only  desirable  but  necessary,  inasmuch  as  it 
conveys  control  of  the  most  valuable  lands  in 
the  grant  for  a  long  term  of  years. 

"This  lease  has  been  lying  here  for  some  time 
during  my  absence  and  1  may  be  called  upon  for 
it  at  any  time.  I  would  therefore  esteem  it  a 
great  favor  if  you  would  give  me  any  sug- 
gestions you  may  have  by  wire. 

"I  can  stave  off  the  delivery  of  this  document 
for  some  time  yet,  I  think,  for  the  reason  that 
if  the  knowledge  of  this  lease  heeame  puhlic 
property  it  will  prohahhj  eause  us  a  great  deal 
of  trouble  in  the  United  States  Land  Office,  and 
nianj  result  in  the  loss  of  a  large  hodij  of  ad- 
jacent lands  which  may  hereafter  turn  out  to 
he  mineral  and  oil  bearing. 

"I  found  on  taking  charge  of  this  office  that 
a  large  body  of  our  lands,  especially  Indemnity 
lands  in  the  Coalinga,  McKittrick*^  and  Sunset 
fields,  had  been  withdrawn  by  the  United  States 
from  entry,  pending  examination  as  to  their 
mineral  character. 

"I  have  worked  very  hard  and  very  steadily 
to  get  the  United  States  to  complete  its  report 
and  dispose  of  this  matter.  I  have  just  suc- 
ceeded in  getting  the  special  agent  in  charge  to 
make  a  report  releasing  our  land  from  inter- 
dictment. 

''If  it  becomes  known  that  we  have  executed 
a  lease  of  lands  interspersed  with  those  already 
under  selection  by  us,  and  that  the  lease  is  for 
oil  purposes,  it  seems  to  me  that  it  will  im- 
mediately encourage  oil  speculators  to  file  upon 
the  lands  so  selected  and  that  the  government 
will  have  good  ground  for  refusing  patent,  inas- 


354 

much  as  tve  liave  practicallij  fixed  the  mineral 
status  of  the  land  by  this  lease. 

"Yours  very  truly, 

(Signed)     "Charles  W.  Ebeiiein, 
JEH  "Acting  Land  Agent." 

(R.  1075-6-7-8-9.) 

The  reading  of  the  foregoing  letter  written  Sep- 
tember 3,  190-i,  while  selection  list  89  was  pending 
before  the  United  States  Land  Office,  can  leave  no 
basis  for  doubt  that  Eberlein,  who  wrote  the  letter, 
and  Judge  Cornish,  the  very  head  of  land  affairs, 
who  received  it,  appreciated  exactly  what  the  real 
situation  was.  What  possibly,  other  than  that  he 
understood  the  purpose  of  the  selection  and  the 
character  of  the  lands,  could  Eberlein  have  meant  in 
saying:  ''If  the  knowledge  of  this  lease  became 
public  property  it  will  probably  cause  us  a  great 
deal  of  trouble  in  the  United  States  Land  Office  and 
may  residt  in  the  loss  of  a  large  body  of  adjacent 
lands  tvhicli  may  hereafter  turn  out  to  be  mineral 
and  oil-bearing  f  When  testifying  as  a  witness, 
Eberlein  freely  admitted  that  this  language  un- 
doubtedlv  referred  to  the  lands  then  under  selection 
and  now  in  suit.  The  significance  of  this  letter  is 
accentuated  by  the  fact  that  it  is  one  of  a  series  of 
letters  and  documents  which  Eberlein  was  compelled 
by  the  government  to  produce  under  subpoena  duces 
tecum,  these  letters  and  documents  having  been  kept 
by  him  apart  from  the  general  files  for  the  protec- 
tion of  himself  and  Judge  Cornish,  as  already  shown. 
It  has  also  been  shown  that  Judge  Cornish,  to  whom 


355 

the  letter  was  addressed,  was  Eberlein's   chief  in 
land  matters,  a  fact  also  shown  by  the  testimony  of 
Mr.  Kruttschnitt  already  set  out  that,  when  Stone's 
threatening  letter  was  received  by  him,  he  referred 
it  to  Judge  Cornish  who  was  the  head  of  land  affairs. 
In  addition  to  the  letter  in  question  and  others  to 
follow,   Eberlein   had   frequent   conversations   with 
Judge   Cornish  and  C.   H.  Markham  in  which  he 
protested  and  pointed  out  the  effect  which  would 
be  produced  in  the  United  States  Land  Office  by  the 
activity  of  Mr.  Dumble  and  his  geologists  in  the 
examination  of  unpatented  lands ;  and  this  occurred 
at  the  very  time  when  the  lease  was  under  consider- 
ation (E.  1091-2).     In  the  case  of  Cosmos  Explor- 
ation Company  vs.  Gray  Eagle  Oil  Company,  supra. 
Judge  Ross  declared  that  if  the  parties,  instead  of 
filing  the  non-mineral  affidavit,  had  represented  to 
the  local  land  officers  that  they  at  least  believed  the 
lands  there   in  suit   to  be   oil   lands,   it   could  not 
be   doubted   that   their   selection   would   have   been 
promptly  rejected.    If  in  the  instant  case  Eberlein, 
upon  whom  the  responsibility  was  devolved  both  by 
the  law  which  required  that  the  non-mineral  affi- 
davit be  executed  by  the  land  agent  and  by  the  reso- 
lution of  the  board  of  directors  of  the  Southern 
Pacific  Railroad   Company  appointing  him  acting 
land  agent,  had,  upon  being  apprised  of  the  purpose 
to  convey  lands  adjoining  the  lands  in  suit  to  an 
oil  development  company,  made  that  fact  known  to 
the  United  States  Land  Officers  instead  of  recklessly 
and  falsely  representing  to  them  that  he  had  caused 
an  examination  of  the  lands  to  be  made  and  that 


356 

they  were  non-mineral  in  character,  can  it  be  doubted 
that  the  selection  list  would  have  been  rejected  and 
the  assailed  patent  would  never  have  issued  and  the 
institution  of  this  suit  would  not  have  been  a  neces- 
sity? 

What  he  in  e fleet  said  was:  "I  swear  that  these 
lands  are  non-mineral",  in  saying  which  he  mani- 
festly did  not  speak  the  truth.  Giving  him  the 
benefit  of  every  doubt  and  assmning  that,  when  the 
first  non-mineral  affidavit  was  made,  he  knew  noth- 
ing whatever  about  the  character  of  the  lands  in 
suit,  yet,  when  he  did  learn  of  facts  which  put  him 
on  notice,  having  put  his  hand  to  the  plow  he  would 
not  turn  back — having  started  out  to  secure  patent 
to  the  lands  in  suit  and  having  sworn  that  they  were 
non-mineral,  he  shows  both  by  his  correspondence 
and  his  testimonj^  that  his  purpose  was  to  carry  the 
enterprise  through  to  the  end  notwithstanding  any 
knowledge  that  might  come  to  him. 

It  is  manifest  that,  when  he  initiated  the  proceed- 
ings intended  to  eventuate  in  patent  to  the  lands  in 
suit,  Eberlein  was  bent  upon  the  success  of  his 
effort  regardless  of  the  real  character  of  the  se- 
lected lands  and,  as  in  the  Diamond  Coal  &  Coke 
Company  case,  "without  care  as  to  the  means".  This 
is  clearly  shown  by  the  fact  that  he  falsely  swore 
that  he  had  caused  an  examination  of  the  lands  to 
be  made  for  the  purpose  of  determining  their  char- 
acter when  in  truth  he  had  not  done  so.  He  testified 
as  a  witness  that  he  knew  nothing  of  them  and  yet 


357 

as  acting  land  agent  lie  swore  that  they  were  non- 
mineral.     However  this  may  be  and  while  it  is  by 
no  means  conceded  that  he  had  no  guilty  knowledge 
at  the  time  of  filing  the  first  non-mineral  affidavit, 
yet,  on  the  other  hand,  if  for  purposes  of  argument 
it  were  admitted  that  he  was  ignorant  at  that  time 
of  their  true  character,  it  is  manifest  that  on  Sep- 
tember 3,  1904,  when  he  wrote  his  "personal"  letter 
to  the  chief,  Judge  Cornish,  he  realized  the  mineral 
character  of  the  lands  in  suit  and  stated  in  the  con- 
cluding   paragraph   thereof    that    the    fact    of   the 
execution  of  the  lease  to  the  Kern  Trading  &  Oil 
Company  and  what  it  imported  constituted  ''good 
grounds  for  refusing  patent  inasmiicli  as  we  prac- 
tically fix  the  mineral  status  of  the  land".     It  is 
manifest  that,  since  there  were  "good  grounds  for 
refusing  patent",  he  was  under  the  solemn  duty  of 
making  those  grounds  known  to  the  United  States 
to  whose  officers  he  had  sworn  in  effect  that  there 
w^ere  not  good  grounds  for  refusing  patent.     The 
only  "good  grounds  for  refusing  patent"  would  be 
the  mineral  character  of  the  lands,  since  such  were 
the  only  lands  excepted  from  the  operation  of  the 
granting  act;  and  the  sole  question  involved  in  the 
application  for  patent  was  the  character  of  the  lands. 
In   this   connection   attention   is   again   invited   to 
the    resolution   of   the   board    of    directors   of   the 
Southern    Pacific    Railroad     Company     appointing 
Eberlein  acting  land  agent  by  which  he  was  "fully 
authorized  and  empowered  to  represent  this  com- 
pany in  the  United  States  Land  offices  or  before 
the  officers  thereof"  (R.  1038-9).    There  can  remain' 


358 

no  doubt  that  on  September  3,  1904,  three  months 
before  the  patent  issued,  Eberlein  had  notice  and 
knowledge  of  the  mineral  character  of  the  lands  in 
suit  and  that  his  notice  and  his  knowledge  consti- 
tuted notice  and  knowledge  to  the  Southern  Pacific 
Railroad  Company  and  that  every  act  done  by  him 
in  support  of  the  selection  of  the  lands  in  suit  was, 
by  reason  of  the  resolution  in  question,  the  act  of 
appellants.  Two  days  after  mailing  the  foregoing 
letter  to  his  chief  in  Xew  York  Eberlein  transmitted 
the  third  and  last  non-mineral  affidavit  to  the  Regis- 
ter and  Receiver  at  Visalia.  If,  instead  of  trans- 
mitting a  false  oath  as  to  the  character  of  the  lands 
in  suit,  he  had  made  known  to  the  Register  and 
Receiver  what  he  had  made  known  to  Judge  Cornish, 
the  assailed  patent  would  never  have  issued  and  the 
govermnent  would  never  have  been  under  the  neces- 
sity of  instituting  this  suit;  and  apj^ellants  will 
hardly  suggest  that  Eberlein  had  the  right  to  with- 
hold from  the  United  States  any  information  which 
he  received  during  the  pendency  of  the  proceedings 
which  resulted  in  patent.  The  legal  effect  of  with- 
holding material  information  concerning  the  true 
character  of  lands  sought  to  be  patented  is  the  same 
as  oifering  false  evidence.    Eberlein  did  both. 

Although  in  the  foregoing  letter  Eberlein  had 
stated  that  he  would  esteem  it  a  great  favor  if  Judge 
Cornish  would  give  him  any  suggestion  he  might 
have  by  wire  (R.  1078),  he  received  no  answer  either 
by  way  of  letter  or  telegram  (R.  1212).  Judge 
Cornish  ''never  would  go  on  record  about  anything 


359 

hj  letter  if  he  could  possibly  avoid  it"  and,  as  a  con- 
sequence, Eberlein  said  that  he  spent  a  great  part 
of  his  time  running  back  and  forth  between  San 
Francisco  and  New  York,  spending  half  of  his  time 
in  the  latter  place  (E.  1243).  Consequently  Eber- 
lein went  to  New  York  late  in  the  Fall  or  early  in 
the  Winter  of  1904  and  held  a  conference  with  Judge 
Cornish  about  the  subject  matter  of  the  letter  in 
question  (R.  1125-6).  It  is  best  to  let  that  con- 
ference be  related  in  the  Avords  of  Eberlein  himself 
and  accordingly  the  questions  and  answers  from  the 
transcript  are  here  given: 

*'Q.  Now,  will  you  relate,  as  nearly  as  you 
can  recollect,  what  the  substance  of  the  con- 
versation was  with  Mr.  Cornish  with  respect  to 
what  I  have  read  from  that  letter,  Mr.  Eberlein  ? 
Before  entering  upon  that,  may  1  ask  you 
whether  you  took  with  you  at  that  time  this 
attempted  lease  which  has  been  introduced  in 
evidence  and  such  correspondence  as  has  also 
been  introduced? 


u 


A.     Yes  sir. 


"Q.  Saved  bv  you  from  the  conflagration  of 
1906? 

"A.  Yes  sir.  This  matter  was  taken  up  by 
Judge  Cornish  and  myself  and  discussed  at 
that  time. 

*'Q.  Did  you  talk  over  that  phase  of  the 
letter,  specifically,  which  reads  as  follows:  'If  it 
becomes  known  that  we  have  executed  a  lease 
of  lands  interspersed  with  those  already  under 
selection  bv  us  and  that  the  lease  is  for  oil 
purposes  it  seems  to  me  that  it  will  immediately 
encourage  oil  speculators  to  file  upon  the  lands 
so  selected  and  that  the  government  will  have 


360 

good  ground  for  refusing  patent,  inasmuch  as 
we  practically  fix  the  mineral  status  of  the  land 
by  this  lease.' 

*'A.  Yes;  we  discussed  all  phases  of  the 
matter  and  agreed  as  to  the  imjDropriety  of  a 
lease  at  that  time. 

"Q.  The  lands  referred  to  by  you  in  that 
letter,  I  believe  you  stated  once,  were  the  lands 
in  suit  in  township  30  South,  Range  23  East, 
Mount  Diablo  Meridian? 

"A.  I  understand  now  the  lands  in  suit  are 
the  lands  covered  by  that  selection  list  89  ? 

"Q.     Yes  sir. 

''A.     Yes  sir. 

''Q.  And  those  were  the  specific  lands  to 
which  you  referred  in  your  letter  and  in  your 
conversation  which  occurred  with  Mr.  Cornish? 


a 


A.     Must  have  been. 


"  Q.  Now,  state,  as  nearly  as  you  can  recollect, 
what  conversation  you  had  with  Mr.  Cornish 
about  the  execution  of  that  lease? 


a 


'A.  We  took  this  matter  up  with  all  the 
papers;  looked  them  through,  and  I  asked  him 
what  he  wanted  done  with  them  and  he  was 
very  positive  in  his  instruction  that  I  was  not  to 
sign  it  or  to  recognize  it.  He  considered  it  an 
improper  lease  to  be  made,  having  reference  to 
the  selection  list  of  lands  in  the  immediate 
neighborhood.  He  furthermore  told  me  that  I 
was  to  keep  all  those  papers  in  my  own  posses- 
sion, so  that  they  might  not  be  in  the  office 
where  they  might  be  considered  as  going  where 
anyone  would  have  any  knowledge  of  the  docu- 
ment, so  that  it  could  not  be  acted  upon  in  some 
way  during  my  absence ;  that  is,  he  particularly 
cautioned   me    against   the    approval    of   those 


361 

vouchers  whieli  were  beginning  to  come  in  at 
that  time  for  pipage. 

"Q.  Well,  did  he,  at  that  time,  instruct  you 
positively  to  keep  the  papers  which  have  been 
introduced,  constituting  the  correspondence  be- 
tween yourself  and  other  officials  of  these  roads, 
and  have  them  filed  separately  from  the  other 
files  of  the  Land  Department  of  the  Southern 
Pacific  Eailroad  Compan}^? 

"A.  His  instruction  was  that  I  was  to  keep 
those  to  myself.  He  said  they  might  hereafter 
be  necessary  for  my  protection.  They  have 
been  kept  by  me  ever  since — and  incidentally  for 
his  own  protection. 

"Q.  Did  you  and  Mr.  Cornish  at  that  time 
recognize  any  troulDle  which  might  arise  in  the 
future  from  the  making  up  there  of  those  docu- 
ments ? 


a 


'A.  We  naturally  recognized  at  least  the 
very  ambiguous  position  in  which  we  would  be 
placed,  both  of  us,  by  that  lease,  if  that  lease 
were  made — and  especially  if  I  made  the  lease, 
I  having  also  made  the  selection  list  which  was 
at  that  time  unapproved. 

"Q.     That  is,  it  had  not  gone  to  patent? 

''A.  It  had  not  gone  to  patent.  It  had  been 
apj^roved  but  not  patented. 

"Q.  And  in  support  of  that  selection  list  re- 
ferred to  by  you  which  has  been  introduced  in 
evidence,  you  had  made  the  usual  non-mineral 
affidavit^  testifying  under  oath  that  the  lands, 
so  far  as  you  laiew,  were  non-mineral  in  char- 
acter ? 

"A.     Yes  sir. 

"Q.  Now,  did  the  fact  that  you  had  made 
that  non-mineral  affidavit  and  the  further  fact 


Q 


62 


that  the  lands  were  in  process  of  administration 
in  the  Land  Department  of  the  United  States, 
and  no  patent  havino^  issued,  give  you  notice  of 
the  trouble  which  would  ensue  if  you  executed 
that  lease? 

"A.  I  don't  know  as  I  understand  that  ques- 
tion exactly;  but  I  simjDly  state,  as  I  have 
already  stated,  that  the  fact  that  I  had  made  a 
non-mineral  affidavit  covering  a  large  selection 
list,  in  perfect  good  faith,  believing  the  fact  to 
be  as  set  forth  in  that  non-mineral  affidavit,  it 
didn't  seem  good  policy,  to  say  the  least,  for  me 
to  turn  around  and  make  a  lease  of  lands  which 
were  in  juxtaposition  to  these  same  lands,  and 
I  believed,  and  Judge  Cornish  believed  thor- 
oughly, that  it  might  give  rise  to  trouble. 

''Q.  Now,  what  trouble  would  you  expect 
from  that  and  what  trouble  did  you  have  in 
mind  ? 

"A.  Naturally  would  expect  that  if  the  lease 
was  made  at  that  time,  with  those  lands  mixed 
up  as  they  were,  or  adjacent,  that  the  govern- 
ment of  the  United  States,  having  in  mind  that 
they  were  very  active  about  that  time  in  nosing 
into  everything  that  affected  railroad  lands, 
would  be  very  apt  to  call  that  lease  at  least  in 
question  and  make  effort,  at  least — or  hold  it 
up  or  entirely  knock  it  out. 

"Q.  In  other  words,  to  completely  preclude 
the  possibility  of  the  Southern  Pacific  Railroad 
Comi^any  acquiring  title  under  that  list? 

'A.     Yes,  very  probably  would." 


u 


It  has  already  been  related  that  in  the  Fall  of 
1907  Eberlein  met  Judge  Cornish  in  the  latter 's 
private  car  leaving  Ogden  and  that  at  that  time 
Judge  Cornish,  ])eing  under  the  impression  that  the 


363 

papers  and  correspondence  relating  to  this  fraud 
liad  been  destroyed  in  the  San  Francisco  fire  of 
1906,  told  Eberlein  that  he  had  destroyed  his  file  of 
that  correspondence.  For  some  reason  which  does 
not  appear  Eberlein  did  not  at  that  time  inform 
Judge  Cornish  that  this  incriminating  correspond- 
ence had  been  saved  from  the  fire  and  Judge  Cornish 
died  in  the  belief  that  none  of  these  papers  had  sur- 
vived the  flames. 

September  10,  1904,  seven  days  after  the  date  of 
his  famous  letter  to  Judge  Cornish  and  a  little 
more  than  a  month  after  C.  H.  Markham,  general 
manager  of  the  Southern  Pacific  Company  and 
second  vice-president  of  the  Southern  Pacific  E ail- 
road  Company,  had  presented  the  proposed  lease 
to  the  Kern  Trading  &  Oil  Company  to  Eberlein  for 
his  signature,  Eberlein,  the  lease  being  still  un- 
executed by  him.  addressed  a  letter  to  Mr.  Markham 
in  which  he  w^arned  him  that  he  had  selected  in 
behalf  of  the  railroad  the  lands  now  in  suit  and  had 
represented  them  to  be  non-mineral  in  character 
(R.  1053-4-5-6).  This  letter,  so  far  as  it  is  here 
pertinent,  reads  as  follows: 

"In  addition  to  this  there  is  a  very  urgent 
reason  for  delaying  the  execution  of  these  pa- 
pers. We  have  selected  a  large  body  of  lands 
interspersed  with  the  lands  sought  to  be  con- 
vej^ed  by  this  lease  and  which  we  have  repre- 
sented as  non-mineral  in  character.  Should 
the  existence  of  this  lease  become  known  it 
tvould  go  a  long  wajj  toward  establishing  the 
mineral  character  of  the  hoids  referred  to  and 
which  are  still  unpatented"  (E.  1055-6). 


364 

This  letter  is  a  contemporaneous  record  made  by 
Eberlein  himself  at  the  very  time  when  he  was 
swearing  to  the  non-mineral  character  of  the  lands 
in  suit  and  demonstrates  his  knowledge  of  the  sit- 
uation and  of  the  real  character  of  the  lands  in  suit. 

It  will  be  remembered  that  throughout  this  time 
and  for  years  subsequent  Professor  Dumble,  the 
Southern  Pacific  geologist,  was  frequently  "butting 
in",  as  Eberlein  expressed  it,  on  lands  within  the 
Southern  Pacific  Eailroad  Company's  grant  which 
were  still  unpatented  (R.  1043).  Dumble  kept  up 
this  practice  of  making  geological  examinations  of 
unpatented  lands  within  the  grant  to  the  Southern 
Pacific  Railroad  Companj^ — a  custom  established  by 
Treadwell  several  years  previously  (R.  3471) — his 
only  conceivable  purpose  being  to  determine  their 
mineral  character,  over  the  continuous  objection  of 
Eberlein  until  it  resulted  in  a  vigorous  letter  written 
by  Eberlein  on  February  22,  1908,  to  Henry  Conlin, 
his  assistant  land  agent.  This  letter  reads  as  fol- 
lows: 

"Feb.  22,  1908. 
"Mr.  Conlin: 

"The  New  York  office  has  forbidden  the  eiv- 
ing  out  of  any  more  printed  lists  of  lands  be- 
cause of  the  unsatisfactory  condition  of  our 
titles  which  must  not  be  disclosed.  The  exami- 
nation of  our  S.  P.  lands  not  yet  patented  by 
our  oil  experts  must  be  stopped  as  information 
that  they  may  obtain  or  give  as  to  mineral  char- 
acter prior  to  patent  will  forever  prevent  our 
getting  title.  Should  Mr.  Calvin  (^all  for  any 
lists  please  take  this  memo,  to  him  and  explain 
our  situation  and  refer  him  direct  to  the  New 


365 

York  office.  Please  advise  liim  too  of  the  press- 
ing necessity  of  tlie  return  of  lists  sent  in  a 
year  ago  for  entry  of  lands  to  be  resented  for 
company  purposes.  Mr.  Dimible  and  Ms  men 
should  not  be  furnished  b}^  us  with  any  data 
whatever  except  as  to  patented  lands.  For 
reasons  above  given  such  information  will  be 
embarrassing  to  them  and  us  and  may  make 
them  witnesses  against  this  company  in  mineral 
contests  hereafter. 

(Signed)     "Chas.  W.  Eberlein, 

"Acting  Land  Agent." 

(R.  1904-5.) 

The  "New  York  office"  reference  was  to  Judge 
Cornish  who,  it  has  been  heretofore  shown,  exer- 
cised authority  in  land  matters  (E.  1095-6).    Eber- 
lein explained  that   Bumble's   examination   of   un- 
patented lands  was  at  the  date  of  the  letter  a  con- 
tinuation  of   conduct  begun  in  1903  and  that  the 
letter   was   a    continuation   of   his,    Eberlein 's,    re- 
peated protests  (R.  1097-8).      He  had  protested  to 
Judge  Cornish,  as  also  to  Mr.  Markham,  to  whom 
prior  to  patent  he  had  pointed  out  that   "people 
acting  without  any  kind  of  knowledge  of  what  they 
were  doing,  without  any  refernce  to  the  selection 
list    of    the    company,    without    any    reference    to 
whether  the  lands  were  patented  or  even  surveyed 
—that  it  would  charge  the  company  with  notice". 
He  claimed  that  it  did  not  charge  him  with  notice, 
"hut  it  certain] ij  would  he  the  grounds  on  ivhicli  to 
get  in  and  protest  the  patents  or  protest  the  lists 
and  so  the  fact  turned  out  to  he"  (R.  1092-3).     It 
thus   appears   that   in   1904   Eberlein   foresaw   the 


366 

trouble  that  was  in  store  and  made  a  prediction 
wliicli  had  its  fulfilhnent  in  the  institution  of  this 
suit. 

After  the  lease  had  been  submitted  to  him  on 
August  2,  1904,  Eberlein  left  for  Denver  (E.  1191) 
and  on  August  4  wired  his  assistant,  George  A. 
Stone,  that  no  land  would  be  for  sale  at  any  price 
and  instructed  him  to  hold  the  lease  until  his  re- 
turn (E.  10-18).  On  August  5  Stone  informed 
Markham  that  Eberlein  had  gone  to  Denver  and 
would  take  up  the  matter  of  the  lease  immediately 
upon  his  return  (E.  1019).  September  5,  1901, 
]Markham  wrote  Eberlein  acknowledging  receipt  of 
Stone's  letter  of  August  5  and  asking  when  he 
might  expect  the  lease.  This  resulted  in  Eber- 
lein's  warning  of  September  10,  1901,  the  letter  al- 
ready referred  to  (E.  1053-4-5-6). 

September  19,  1904,  Dmnble  wrote  Markham  a 
letter  in  which  he  returned  Eberlein 's  letter  of 
September  10  to  Markham  (E.  2950-1).  Dumble's 
letter  shows  clearly  by  its  references  that  he  had 
carefully  read  the  letter  from  Eberlein  to  Mark- 
ham and  he  admitted  that  it  was  the  letter  re- 
ceived bv  him  from  Mr.  Markham  with  the  latter 's 
letter  of  September  15,  1904.  AVhether  it  was  ident- 
ical with  it  or  not  he  stated  that  he  could  not  say 
"after  this  lengih  of  time"  (E.  2951);  but  he  did 
not  remember  the  most  material  parts  of  it,  es- 
pecially the  damaging  and  incriminating  portions 
(E.    2951-2).      Dumble's    testimony    at    this    point 


367 

leads  to  one  of  two  conclusions :  either  that  his  fail- 
ure of  memory  was  most  convenient  or  that  Mr. 
Markham,  in  sending  him  a  copy  of  Eherlein's 
letter,  ^^I'^^^l^iitly  deleted  the  incriminating  jdo^'- 
tions,  a  presumption  not  easily  indulged. 

Following  the  letter  of  September  10,  1904,  from 
Eberlein  to  Markham  and  the  continual  verbal  pro- 
tests made  by  the  former  against  Dumble's  activi- 
ties in  the  examinations  of  unpatented  lands,  on 
October  5,  1901,  Dumble  requested  by  letter  an  in- 
terview with  Eberlein  evidently  for  the  purpose  of 
discussing  the  bearing  of  the  proposed  lease  upon 
the  selection  list  then  pending  before  the  Register 
and  Receiver  at  Visalia.  To  that  letter  Eberlein 
replied : 

''October  7th,  1901. 
''Mr.  E.  T.  Dumble, 

' '  Consulting  Geologist 
"Bldg. 

"Dear  Sir: 

"Referring  to  your  note  of  Oct.  5th,  I  beg  to 
say  I  will  be  glad  to  take  matters  up  with  you 
as  suggested  any  time  tomorrow  that  will  be 
convenient  to  you.  I  would  suggest  that  you 
might  find  it  more  convenient  to  come  to  room 
71  where  we  can  have  a  room  to  ourselves  and 
not  be  disturbed.  If,  however,  you  prefer  I 
should  come  to  your  room,  please  advise  me. 

"Yours  truly, 

(Signed)    "Charles  W.   Eberlein 
"  'Donaldson'  "Acting   Land   Agent." 

"Compared  bv:  H.  K. 

"L.  A. 
(R.  1065-6.) 


368 

Immediately  following  this  conference  Eber- 
lein,  throngh  his  assistant  Stone,  on  October  8, 
1904,  forwarded  to  Dumble  ''plats  showing  the 
statns  of  lands  within  the  Southern  Pacific  Railroad 
grant  in"  certain  townships  including  the  town- 
ship containing  the  lands  here  in  suit  (R.  1067). 

Following  this  conference  between  Dumble  and 

Eberlein  in  room  71,  the  former  on  December  7, 

1904,  wrote  the  following  to  Mr.  W.  H.  Bancroft, 

acting   general   manager   of   the    Southern    Pacific 

Company : 

' '  Southern   Pacific    ComiDanj^, 
"San  Francisco,  Cal,  Dec.  7,  1904. 

"Mr.  W.  H.  Bancroft, 
"Acting  Genl.  Mgr.,  City. 

"Dear  Sir: — 

"In  connection  with  our  correspondence  re- 
garding the  transfer  of  property  to  the  Kern 
Trading  &  Oil  Company,  I  have  had  a  conver- 
sation with  Mr.  Eberlein  and  it  scetns  for  rea- 
sons of  policy  regarding  certain  unpatented 
lands  that  it  will  he  best  not  to  execute  the 
lease  of  lands  hettveen  the  S.  P.  B.  R.  Co.,  and 
the  K.  T.  &  0.  Co.,  at  present. 

"I  would,  therefore,  suggest  that  the  papers 
covering  the  transfer  of  property  from  the  S. 
P.  Co.,  to  K.  T.  &  O.  Co.,  be  executed  and  that 
the  lease  of  lands  in  the  McKittrick  and  Coa- 
linga  districts  from  the  S.  P.  R.  R.  Co.  to  the 
K.  T.  &  O.  Co.  be  held  up  for  the  present. 
"Yours  very  truly, 

"D-R  (Signed)   "E.   T.  Dumble." 

"CC-C.  W.  E. 
"Compared  bv:  H.  K. 
"L.   A." 
(R.  1072-3.) 


369 

The  notation  at  the  bottom  of  the  letter  ''CC-CWE" 
indicates  that  a  carbon  copy  of  that  letter  was  sent 
to  C.  W.  Eberlein. 

In  this  letter  it  clearly  appears  that  Dumble  had 
been   advised   by   Eberlein   that    it   would   be    im- 
politic, in  view  of  the  pendency  of  selection  list  89, 
to   execute   the  lease  to   the   Kern   Trading  &  Oil 
Company.      The    letter    points    to    the    falsity    of 
Bumble's  testimony  denying  knowledge  of  the  min- 
eral character  of  the  lands  in  suit  and  shows  be- 
yond question  that  he  concurred  with  Eberlein  prior 
to  the  issuance  of  patent  in  the  policy  of  concealing 
from  the  United  States'  land  office  the  truth  as  to 
the  lands   under   selection.     This   is   confirmed   bv 
another  letter  of  Mr.  Dumble  dated  March  15,  1907, 
and  addressed  to  Eberlein  in  w^hich  the  former  re- 
viewed certain  facts  in  connection  with  the  selec- 
tion of  the  lands  in  suit.     Eberlein  consistently  re- 
fused to  recognize  any  rights  of  the  Kern  Trading 
&  Oil  Company  in  the  lands  embraced  in  the  pro- 
posed   lease    which    he    had    never    executed.      He 
therefore  carried  things  to  the  extent  of  denying 
knowledge  regarding  the  lease,  so  anxious  was  he 
to  avoid  the  stultification  which  would  arise  from 
his  course  in  representing  the  lands  in  suit  to  be 
non-mineral  when  he  had  notice  of  the  purpose  to 
lease  lands  lying  around  them  for  oil  development 
purposes.     In  1907  it  served  Dumble 's  purpose  to 
attempt  to  refute  Eberlein 's  denial  of   knowledge 
concerning  the  lands  and  accordingly  he  wrote  a 
letter  to  him  in  which  he  called  attention  to  certain 


370 


correspondence  between  various  officials  of  the 
Southern  Pacific  Company  and  the  Southern  Pa- 
cific Railroad  Company  and  among  other  things 
reminded  Eberlein  as  follows: 

"The  matter  of  differences  in  the  land  I  took 
up  with  you  personally  and  under  date  of  Oc- 
tober 8,  1904,  you  sent  me  corrected  maps 
showing  exactly  what  lands  were  to  be  covered 
by  the  lease  as  drawn.  Early  in  December  we 
had  a  further  conference  on  the  matter  and 
you  explained  that  you  were  rushing  certain 
lands  for  final  patent  and  that  the  immediate 
execution  of  the  lease  showing  our  idea'  of  ivhat 
were  oil  lands  might  interfere  with  you  and  we 
agreed  to  defer  the  execution  until  thai  danger 
tvas  passed.  On  December  7,  1904,  I  wrote 
Mr.  Bancroft  explaining  this  and  suggesting 
that  the  lease  be  held  up  temporarily,  the  pa- 
pers having  been  approved  by  all  concerned 
and  being  in  the  hands  of  the  management,  I 
considered  that  I  had  nothing  further  to  do 
with  them."     (R.  2957.) 

In  this  letter,  written  five  years  before  this  suit 
was  brought,  Dumble  put  it  on  record  that  he  and 
Eberlein  prior  to  patent  discussed  the  "danger"  of 
the  situation  and  were  in  agreement  that  the  pro- 
posed  lease  to  the  Kern  Trading  &  Oil  Company 
showed  Bumble's  idea  of  what  were  oil  lands;  and, 
when  it  is  remembered  that  a  part  of  these  lands 
were  in  the  township  containing  the  lands  in  suit, 
it  is  evident  that  Dumble  shared  Eberlein's  appre- 
hension that,  if  the  facts  tvere  made  known  to  the 
Land  Office,  patent  wotdd  be  denied.  He  was  so 
convinced  of  this  situation  that  he  ivrote  the  acting 


371 

general  manager  and  suggested  that   the  lease   he 
held  up  temporarily. 

Reverting  for  the  moment  to  the  conference  be- 
tween Eberlein  and  Judge  Cornish  in  New  York: 
Eberlein  testified  that  in  their  conversation  they 
discussed  the  effect  of  the  Kern  Trading  and  Oil 
Company  lease  upon  the  pending  applications. 
Said  Eberlein:  "That  was  the  thing  that  was  more 
interesting  to  him  than  anything  else.  I  don't 
think  he  bothered  himself  about  these  details  that  I 
mentioned.  I  think  he  thought  that  was  a  matter 
to  leave  to  the  gentlemen  in  charge  here.  But  as 
to  that  matter,  he  was  very  positive"  (E.  1246). 

Nothino'  could  more  clearlv  show  Eberlein 's  state 

of  mind  than  his   own  testimony  as   recorded   on 

pages  1249  and  1250  of  the  record  where  he  said, 

referring   to    the    Kern   Trading   &    Oil    Company 

lease : 

"If  what  indirect  information  I  had  was 
correct,  the  lands  were  to  be  transferred  to  an 
oil  development  company,  and  what  I  refer  to 
here,  badly  expressed  as  it  is,  is  my  fear  that 
the  government  would  take  the  very  narrowest 
view  possible  of  the  situation  and  simply  say 
'here  you,  the  land  agent,  land  officer  of  the 
Southern  Pacific,  are  making  the  lease  of  these 
lands  h'ing  here  to  an  oil  development  com- 
pany and  at  the  same  time  you  have  got  an 
application  for  lands  non-mineral  lying  ad- 
jacent'. I  simply  say  that  my  experience  with 
the  Department  has  always  been  that  it  takes 
very  much  less  than  that  to  make  them  hold 
things  up  and  perhaps  take  things  away  from 
you,  because  a  railroad  company  has  very  lit- 


372 

tie    chance    in    its    dealings    with    the    United 
States  General  Land  Office."     (R.  1249-50.) 

The  "what  I  refer  to  here  badly  expressed  as  it 
is"  relates  to  the  sentence  in  his  letter  of  Septem- 
ber 10,  1904,  in  which  he  said :  "  If  it  becomes  known 
that  we  have  executed  a  lease  of  lands  interspersed 
with  those  already  under  selection  by  us  and  that 
the  lease  is  for  oil  purposes,  it  seems  to  me  that  it 
will  immediately  encourage  oil  speculators  to  file 
upon  the  land  so  selected  and  that  the  government 
will  have  good  grounds  for  refusing  patent,  inas- 
much as  we  practically  fix  the  mineral  status  of  the 
land  b}^  this  lease"  (R.  near  top  of  page  1249). 

It  is  not  surprising,  then,  that,  when  asked  what 
he  meant  when  he  said  "inasmuch  as  we  practically 
fix  the  mineral  status  of  the  land  by  this  lease",  he 
replied:  "That  is  just  it.  It  raises  a  presumption 
and  what  I  was  afraid  of  then  I  think  has  been 
fully  confirmed  now.  It  does  not  say,  I  don't  mean 
to  sa,y,  or  be  understood,  that  these  are  oil  lands  or 
I  thought  thev  were  oil  lands.  I  merelv  sav  the  two 
acts  taken  together  create  a  presumption  which  the 
government  would  not  be  slow  to  take  advantage 
of"  (R.  1250). 

Is  this  not  tantamount  to  a  confession  on  the  part 
of  Mr.  Eberlein  of  knowledge  before  patent  of  the 
mineral  character  of  the  lands  in  suit? 

On  the  trip  to  New  York  to  confer  with  Judge 
Cornish  Eberlein  testified  that  he  carried  the  secret 


73 


files  of  correspondence  with  him.  For  a  while 
these  papers  were  kept  in  his  desk  and  separate 
from  the  general  files  of  the  land  department  of 
the  railroad  company  because  of  his  fear  that  dis- 
coveiT  of  them  might  compromise  both  himself  and 
his  superior  officer,  Judge  Cornish,  who  was  re- 
sponsible to  Mr.  Harriman  and  the  board  of  di- 
rectors in  Xew  York  for  land  affairs  (E.  1256). 
Eberlein's  fear  that  the  papers  relating  to  this 
transaction  would  become  public  property  led  him 
always  to  keep  them  in  his  individual  possession 
(R.  1261).  When  asked  whether  the  file  remained 
constantly  in  his  individual  possession  he  replied: 
''Yes  sir,  until  the  day  it  was  pried  out  of  me  down 
in  Los  Angeles"  (R.  1272),  referring,  of  course,  to 
the  time  when  under  process  of  court  he  was  com- 
pelled to  produce  the  contents  of  it  for  purposes  of 
evidence  in  this  suit. 

It  is  evident  from  the  testimonv  that  others, 
subordinates  in  the  land  department  of  the  rail- 
road company,  George  A.  Stone,  Charlotte  Dorothy 
Cunningham  and  perhaps  others,  were  aware  of  the 
latent  possibilities  slumbering  in  this  correspond- 
ence and  the  importance  of  it  upon  the  considera- 
tion of  the  pending  selection  list  or  in  a  suit  there- 
after to  cancel  the  patent  because  of  fraud.  It  was 
undoubtedly  the  discernment  and  calculating  in- 
telligence of  George  A.  Stone,  who  had,  as  we  have 
seen,  had  access  to  these  papers  at  one  time,  which 
turned  them  to  profitable  account  in  his  threats  of 
exposure  resulting  in  his  pensioning. 


374 

It  is  natural  that  Eberlein  should  seek  to  justify 
Ms  own  actions ;  and  it  is  pert ecth^  plain  that  it  was 
his  policy  to  appear  to  know  as  little  as  possible 
about  the  lands  of  the  Southern  Pacific  Railroad 
Company  to  which  he  was  endeavoring  to  secure 
patent.  Referring  to  his  letter  of  February  22, 
1908,  to  Conlin  (R.  1094)  he  said: 

"You  remember  the  last  letter  introduced  in 
evidence  is  a  protest  of  mine  against  Dmnble 
examining  unpatented  lands  without  any 
knowledge  of  or  reference  to  or  cooperation 
with  the  land  department.  I  think  it  is  a  very 
reasonable  thing  for  any  man  charged  with  the 
duties  that  I  was  charged  with — the  duty  of 
making  a  non-mineral  affidavit  on  the  very  best 
information  he  could  obtain,  as  I  did — to  have 
the  feeling  that  some  man  examined  those  lands 
and  charged  the  company  with  notice,  but 
without  charging  me  with  notice.  Now,  that  is 
as  far,  I  think,  as  I  can  go  in  this  matter"  (R. 
1038). 

Again,  referring  to  the  same  letter,  he  testified: 

"O,  yes,  it  is  evident  from  the  letter  that  that 
is  just  what  I  meant — that  I,  for  instance,  might 
make  a  selection  of  lands  depending  on  my 
examination  and  a  trained  geoh)gist  might  have 
been  over  the  same  ground  without  my  knowl- 
edge and,  whether  I  was  right  or  wrong,  I  felt 
that,  inasmuch  as  he  was  connected  with  the 
Soutliern  Pacific  there  might  be  a  chance  of  a 
claim  that  I  was  charged  with  notice  in  some 
way.  I  coukl  not  be;  still  the  claim  might  be 
made.  It  must  be  remembered  that  all  the 
time,  at  least,  that  I  was  in  the  service,  it  was 
the  ruling  of  the  Department,  as  I  understood 
it,  that  surface  indications  was  all  that  gov- 
erned in  the  matter  of  the  selection  of  lands." 
(R.   1316.) 


375 

From  the  foregoing  it  is  obvious  that  it  was 
Eberlein's  policy  to  appear  to  know  as  little  as 
possible  of  lands  to  which  he  was  seeking  patent. 
^'The  duty  of  makmg  a  non-mineral  affidavit  on 
the  very  best  information  that  he  coidd  obtain" 
was  to  him  an  incentive  to  complete  ignorance  in- 
stead of  an  argmnent  for  advice  and  all  procurable 
data.  Had  he  desired  "the  very  best  information 
he  could  obtain"  he  might  well  have  turned  to  Pro- 
fessor Dumble  in  the  conference  in  room  71  about 
October  5,  1904,  and  asked  him  to  tell  him  the  true 
character  of  the  lands  under  selection.  He  said  that 
he  suspected  Dumble  or  the  geologists  of  the  South- 
ern Pacific  Company  of  knowing  things  that  he  did 
not  know.  Why,  when  the  opportunity  offered,  did 
he  not  take  advantage  of  it  and  secure  from  the 
head  of  the  geologists  of  the  Southern  Pacific  Com- 
pany the  information  so  carefully  gathered  in  their 
examinations  of  unpatented  lands  against  which 
he,  Eberlein,  had  so  vigorously  and  so  continuously 
protested  ? 

This  leads  to  the  observation  that  it  seemed  to  be 
the  policy  of  the  high  officials  of  appellants  not  to 
let  their  right  hands  know  what  their  left  hands 
did.  Eberlein  says  that  he  had  no  connection  with 
and  got  no  information  from  Dumble  and  the  other 
geologists.  Owen  told  Wible  that  he  had  nothing  to 
do  with  selections  (B.  326).  Dumble  said  the  same 
thing  (R.  3084).  Treadwell  also  disclaimed  (R. 
434). 

If  there  were  any  mystery  in  this  case,  it  would 


376 

disappear  as  the  light  shed  by  these  considerations 
comes  in.  The  land  department  and  the  geological 
department  were  separate  and  distinct.  "The 
Jews  have  no  dealings  with  the  Samaritans."  It 
could  not  have  been  mere  accident  that  reports  by 
the  geological  department  never  reached  the  land 
department.  It  could  not  have  been  mere  accident 
that  the  geologists  of  appellants  had  nothing  to  do 
with  selections  and  patents.  The  reports  that  they 
made  and  the  information  which  they  gathered 
must  have  had  a  clearing-house  somewhere.  All 
that  appears  is  that  it  was  not  in  the  land  depart- 
ment. It  is  entirely  conceivable  that  such  reports 
and  maps  would  have  proven  very  embarrassing 
when  it  came  to  making  selections  and  applying  for 
patents.  Hence  the  wisdom  of  keeping  the  two 
departments  severely  separate  and  this  could  only 
have  been  accomplished  by  the  act  of  some  official 
or  officials  of  commanding  position  and,  for  that 
matter,  of  discerning  and  discriminating  intelli- 
gence. Even  a  little  knowledge  on  the  part  of  the 
land  agent  might  prove  a  very  dangerous  thing; 
and  so  it  was  the  policy  of  appellants  to  foster  and 
nourish  his  ignorance. 

Eberlein  had  a  very  good  idea  of  the  duty  cast 
upon  him  by  his  position  and  by  the  law  and  it  was 
no  bad  formula  by  which  he  expressed  it — "the  duty 
of  making  a  non-mineral  affidavit  on  the  very  best 
information  he  could  obtain".  The  trouble  lies  not 
with  the  formula,  but  with  the  application  of  it. 
With  Eberlein  "the  very  best  information  he  could 


377 

obtain"  was,  tested  by  the  conduct  which  he  as  a 
witness  ascribed  to  himself  as  land  agent,  synony- 
mous with  neglect  of  opportunity  to  learn  and  the 
very  highest  measure  of  willful  ignorance  of  which 
he  could  be  guilty.  He  knew  that  Dumble  and 
Owen  and  Anderson  were  examining  unpatented 
lands  within  the  limits  of  the  railroad  grant — per- 
haps the  very  lands  which  he  was  selecting  for 
patent;  and  yet,  if  he  is  to  be  believed,  he  never 
sought  nor  received  any  information  which  was 
theirs  to  impart.  The  reason  of  his  pose  is  plain 
and  inheres  not  so  much  in  Eberlein  himself  as  in 
the  sj^stem  under  which  he  wrought. 

It  is  true  that  Eberlein  was  called  and  sworn  as 
a  witness  for  the  government ; .  but  it  is  manifest 
that  this  was  ex  necessitate.  His  testimony  was  in- 
evitably influenced  by  the  exigencies  of  the  situa- 
tion in  which  he  found  himself.  He  was  the  instru- 
ment of  appellants  through  whom  the  assailed 
patent  was  secured.  He  it  was  who  signed  and  filed 
the  selection  list;  he  it  was  who  executed  and  ten- 
dered the  non-mineral  affidavits  the  falseness  of 
which  is  so  manifest.  Called  to  the  witness  stand 
by  the  government  which  was  seeking  to  invalidate 
an  instrument  secured  through  his  acts  and  oaths, 
it  is  entirely  natural  that  he  should  strive  to  justify 
his  conduct  and  himself.  Under  these  circum- 
stances he  could  hardly  have  been  expected  to  go 
further  in  the  j)ath  of  admission  than  he  actually 
went  when,  referring  to  his  letter  of  February  22, 
1908,  to  Conlin,  in  which  his  protests  against  exami- 


378 

nations  of  unpatented  lands  by  Dumble  and  the 
Southern  Pacific  geologists  reached  their  culmina- 
tion, he  said: 


i(.' 


You  remember  the  last  letter  introduced  in 
evidence  is  a  protest  of  mine  against  Mr.  Dum- 
ble's  examining  unpatented  lands  without  any 
knowledge  of  or  cooperation  with  the  land  de- 
partment. I  think  it  is  a  very  reasonable  thing 
for  any  man  charged  with  the  duties  that  I  was 
charged  with — the  duty  of  making  a  non- 
mineral  affidavit  on  the  very  best  information 
he  could  obtain,  as  I  did — to  have  the  feeling 
that  some  man  examined  those  lands  and 
charged  the  company  with  notice,  but  without 
charging  me  with  notice.  Now,  that  is  as  far, 
I  think,  as  I  can  go  in  the  matter."     (R.  1308.) 

It  may  be  admitted  that  that  is  about  as  far  in 
the  matter  of  a  confession  as  he  could  have  been 
expected  to  go.  The  strange  thing,  however,  is  that 
he  did  not  realize  that  the  duty  resting  upon  him 
of  "making  a  non-mineral  affidavit  on  the  verv  best 
information  he  could  obtain"  laid  him  under  the 
necessity,  if  he  had  reason  to  believe  or  even  fear 
that  another  had  made  an  examination  and  ascer- 
tained things  that  he,  Eberlein,  did  not  know,  of 
making  inquiry  of  such  person  to  the  end  that  he 
might  qualify  himself  to  discharge  his  duty  accord- 
ing to  his  own  formula.  He  either  did  not  want  to 
be  infonned  or  he  did  not  want  to  appear  to  be 
informed.  He  did  not  want  to  be  ''charged  with 
notice";  and  it  is  obvious  that,  for  some  reason 
which  will  be  indicated  in  a  moment,  he  was  irre- 
vocably bent  upon  securing  a  patent,  to  the  lands 
in  suit  and  bitterly  resented  and   constantly  pro- 


379 

tested  against  action  on  the  part  of  others  which 
wonld  imperil  the  enterprise.  This  is  illustrated 
by  the  objections  and  protests  just  referred  to,  as 
well  as  by  his  refusal  to  execute  the  Kern  Trading 
&  Oil  Company  lease  when  insistently  urged  to  do 
so  by  General  Manager  Markham.  He  could  not 
plead  ignorance  of  that  lease  and  all  that  it  un- 
ported  if  he  signed  it — he  would  stultif}^  himself  if 
he  subsequently  denied  knowledge  of  an  instrument 
which  he  himself  had  executed.  He  had  already 
filed  selection  list  89  and  the  accompanying  non- 
mineral  affidavit  and,  having  set  his  hand  to  the 
plow,  was  unwilling  to  turn  back.  His  decision  was 
prompt;  he  declined  to  be  a  party  to  its  execution, 
aj)pealed  to  his  chief  in  New  York,  Judge  Cornish, 
segregated  and  secreted  his  correspondence  with 
reference  to  it  and  thenceforth  feigned  entire  ignor- 
ance of  the  whole  affair — ^an  amazing  course  for  an 
intelligent  being  to  follow,  but  absolutely  necessan^, 
as  he  thought,  to  clear  his  skirts  of  the  guilt  implied 
in  persisting  in  representations  to  the  government 
of  the  non-mineral  character  of  lands  the  while  "we 
practically  fix  the  mineral  status  of  the  land  by 
this  lease".     (R.  1079.) 

If  the  ostrich  is  justl}"  called  a  foolish  bird  be- 
cause of  the  habit  ascribed  to  it  of  burying  its  head 
in  the  sand  and  assuming  that  it  cannot  be  seen,  how 
serious  and  severe  must  be  the  condemnation  of  a 
human  being  who  takes  refuge  behind  a  screen  of 
feigned  ignorance  while  there  exist  written  memo- 
rials  of  his   knowledge!     Eberlein,   deciding   after 


380 

conference  with  Judge  Cornish  not  to  execute  the 
lease  and  following  his  chief's  instructions  to  re- 
move the  correspondence  from  the  general  files, 
goes  forward  with  his  proceedings  looking  to  patent 
of  lands  "adjoining  the  oil  territory"  and  assumes 
to  forget  that  he  ever  heard  of  a  lease  to  an  oil  de- 
veloping company  of  lands  lying  around  those 
which  he  was  seeking  to  acquire.  As  late  as  1907 — to 
be  exact,  February  6,  1907 — Eberlein  wrote  a  letter 
to  Mr.  Seger,  auditor  of  appellants,  "denying  any 
knowledge  or  information  of  any  lease,  agreement 
or  understanding  made  or  entered  into  with  the 
Kern  Trading  &  Oil  Company  for  production  of 
oil  on  the  lands  of  the  Southern  Pacific  Railroad 
Company,"  (R.  2955),  thus  consistently  to  the  bitter 
end  striving  to  avoid  being  "charged  with  notice". 

Nor  does  Eberlein  stand  alone  in  the  condemna- 
tion which  these  revelations  merit.  His  chief, 
Judge  Cornish,  while  he  is  not  shown  to  have  insti- 
gated, at  least  approved  his  course  and  himself 
initiated  the  counsel  of  prudence  that  the  corre- 
spondence be  segregated  and  secreted.  In  the  Fall 
of  1904  Eberlein  had  a  conference  in  New  York 
with  Judge  Cornish  concerning  the  lease  (R.  1126). 
Judge  Cornish  "considered  it  an  improper  lease  to 
be  made,  having  reference  to  the  selection  list  of 
lands  in  the  immediate  neighborhood".  (R.  1127.) 
At  this  conference  Judge  Cornish  instructed  Eber- 
lein to  keep  "those"  papers  to  himself.  "He  said 
they  might  hereafter  be  necessary  for  my  protec- 
tion", Eberlein  testified.    "They  have  been  kept  by 


381 

me  ever  since — and  incidentally  for  his  own  pro- 
tection," he  added  (R. 1128). 

Judge  Cornish,  as  alread}-  shown,  kept  his  file  of 
"those  papers"  segregated  and  secreted.  He  pre- 
served them  until  he  believed  that  the  fire  of  1906 
had  destroved  Eberlein's  file  in  San  Francisco.  He 
informed  Eberlein  on  his  private  car  out  of  Ogden 
in  1907  that,  since  the  fire  had  destroyed  Eberlein's 
copy  of  the  file,  he  had  caused  his  to  be  destroyed 
(R.  1074).  For  some  reason  Eberlein  did  not  in- 
form his  chief  that  he  had  with  great  secrecy,  aided 
by  George  A.  Stone,  caused  copies  to  be  made  from 
the  scorched  remains  of  his,  Eberlein's,  file  and, 
as  far  as  the  record  discloses,  Judge  Cornish  died 
in  ignorance  of  the  existence  of  the  letters  and 
documents  the  production  of  which  was  compelled 
by  subpoena  duces  tecu)ii. 

Is  it  possible  to  escape  the  conclusion  that  Judge 
Cornish  was  not  ignorant  of  Eberlein's  fraud  and 
guilt? 

But  the  chapter  does  not  end  here.  Julius  Krutt- 
schnitt  is  convicted  out  of  his  own  mouth  of  no 
higher  sense  of  duty  or  obligation  than  that  which 
Judge  Cornish  and  Mr.  Eberlein  entertained.  At 
the  period  of  time  here  under  review  he  was  in 
charge  of  the  affairs  of  apiDcllants  on  the  Pacific 
Coast  and  therefore  he  may  be  held  to  speak  ex 
cathedra.  He  testified  that  ''it  was  none  of  Mr. 
Dumble's   business   to   examine   unpatented   lands; 


382 

but,  if  he  did  so,  I  think  it  is  quite  natural  that  Mr. 
Eberlein  should  object.  The  assumption  that  Mr. 
Dumble  did  make  such  examinations  is  altogether 
hypothetical;  but,  if  he  did  so,  Mr.  Eberlein 's  fear 
of  being  embarrassed  in  the  land  office  in  getting 
patents  was  quite  natural.  He  had  had  experience 
of  this  sort  because  the  land  office  had  in  1900  kept 
back  a  large  area  of  lands  and  delayed  patenting 
them  for  several  years  because  of  suspicions  that 
there  was  oil  in  them  and  after  this  long  delay  they 
finally  issued  the  patents.  //'  I  had  known  that  Mr, 
Bunible  was  doing  anything  of  that  kind^  I  tvotdd 
have  stopped  it"  (R.  3101).  It  now  becomes  mani- 
fest that  the  system  referred  to  was  endorsed  and 
fostered  by  Mr.  Kruttschnitt  himself.  It  may  be 
said  in  behalf  of  Mr.  Eberlein  that  his  outlook  was 
naturally  narrow  and  confined  to  the  limits  of  the. 
land  department  whose  duty  it  was  to  select  lands 
and  secure  patents  to  them  apparently  at  whatever 
cost;  but  no  extenuation  can  be  urged  in  behalf  of 
Mr.  Kruttschnitt.  It  may  be  assumed  that  the  land 
department  and  geological  dejDartment  were  co- 
ordinate branches ;  but  over  and  above  and  directing 
them  was  Mr.  Kruttschnitt  himself.  Whatever  the 
land  department  knew  and  was  doing  he  knew; 
whatever  the  geological  department  knew  and  was 
doing  he  knew.  He  could  not  keep  his  right  hand 
from  knowing  what  his  left  hand  did.  The  fore- 
going excerpt  from  his  testimony  throws  a  flood  of 
light  upon  the  question  presented  by  this  record. 
Mr.  Kruttschnitt  says  in  effect  that,  if  he  had 
known  it,  he  would  not  have  allowed  Dumble  to 


383 

examine  imiDa tented  lands  because  of  the  embar- 
rassment which  information  which  he  might  secure 
of  their  mineral  character  would  cause  Eberlein. 
In  other  words,  while  appellants  were  maintain- 
ing a  corps  of  expert  geologists,  it  was  not  their 
policy  to  permit  knowledge  acquired  by  them  to 
reach  the  land  department  upon  which  rested  the 
duty  of  securing  patents  and,  in  connection  there- 
with, of  making  known  to  the  United  States  gov- 
ermnent  the  truth  about  lands  to  which  it  was  en- 
deavoring to  secure  patents.  For  what  purpose, 
except  to  guide  in  selections,  were  the  Southern 
Pacific  geologists  examining  unpatented  lands?  To 
whom  did  they  report  ?  Not  to  the  land  department 
(E.  1043  and  1091)  ;  but  to  Mr.  Kruttschnitt  (R. 
3080-3).  Mr.  Kruttschnitt 's  complacence,  it  may 
be  respectfully  submitted,  is  amazing.  He  tran- 
quilly shuts  his  eyes  to  the  fact  that  both  the  land 
department  and  the  geological  department  were 
parts  of  a  common  w^hole  and  that,  in  their  re- 
spective spheres  they  represented  the  Southern  Pa- 
cific interests.  It  does  not  lie  in  the  mouth  of  ap- 
pellants to  say  that,  because  they  purposely  strove 
to  keep  knowledge  acquired  by  the  geological  de- 
partment from  the  land  department,  they  were 
ignorant  of  what  either  of  these  departments  knew. 
It  cannot  be  doubted  upon  this  record  that  Eberlein 
believed  in  the  mineral  character  of  the  lands  in 
suit;  but,  whether  he  did  or  not,  the  knowledge 
which  his  superiors  possessed  is  imputable  to  him. 
The  non-mineral  affidavit  which  he  made  was  know- 
ingly false ;  but  for  the  purpose  of  this  case  it  is  not 


384 

necessary  that  it  api^ear  that  it  was  known  hy  him 
to  be  false.  His  act  in  making  it  was  the  act  of  the 
Southern  Pacific  Railroad  Company  and,  insofar 
as  it  is  concerned,  the  affidavit  was  false  and  fraud- 
ulent, if  for  no  other  reason,  because  the  Southern 
Pacific  Railroad  Company  had  knowledge  through 
another  department  that  the  facts  in  it  represented 
to  be  true  were  false.  Mr.  Kruttschnitt,  fixed  mth 
knowledge  imparted  to  him  by  his  geologists  and 
knowing  of  and  aiding  Eberlein  in  the  matter  of 
securing  action  upon  the  selection  list,  was,  in  con- 
templation of  law,  as  much  responsible  for  the 
falsity  of  the  non-mineral  affidavits  as  was  Eberlein 
himself. 

In  giving  the  testimony  above  set  out  Mr.  Krutt- 
schnitt evidentlv  was  endeavorino;  to  refute  Eber- 
lein's  evidence  of  Dumble's  examination  of  unpat- 
ented lands  including  the  lands  in  suit;  but  Dmn- 
ble  in  his  testimony  contradicts  him  at  this  point. 
Witness  his  evidence  on  pages  2985-6-7  of  the 
record,  where  it  clearly  appears  that  he  in  effect 
admitted  to  Eberlein  that  he  had  made  such  exami- 
nation, but  says  that  he  denied  that  they  would  have 
the  effect  which  Eberlein  feared.  When  Dumble 
was  asked  what  danger  he  referred  to  in  his  letter 
of  March  15,  1907,  to  Eberlein  in  which  he  wrote: 

''Early  in  December  we  had  a  further  con- 
ference on  the  matter  and  you  explained  that 
you  were  rushing  certain  lands  for  final  patent 
and  that  the  immediate  execution  of  the  lease, 
showing  our  idea  of  what  were  oil  lands,  might 
interfere  with  you  and  we  agreed  to  defer  the 
execution  until  that  danger  was  passed," 


385 

he  answered  as  follows: 

"The  danger  that  I  referred  to  was  just  as 
I  stated;  danger  of  interfering  with  him  and 
the  danger  that  these  lands  might  he  delayed 
and  not  he  patented  heeaiise  of  their  nmieral 
character/' 

Enough  has  already  been  shown  to  demonstrate 
Dmnble's  appreciation  of  the  position  in  which 
appellants'  selection  list  was  placed  by  what  was 
imported  in  the  proposed  lease  to  the  Kern  Trad- 
ing &  Oil  Company.  He  not  only  agreed  upon  this 
point  with  Eberlein,  but  wrote  the  letter  to  acting 
general  manager  Bancroft  in  which  he  suggested 
that  "for  reasons  of  policy  respecting  unpatented 
lands"  the  execution  of  the  lease  be  deferred  until 
that  danger  is  passed". 


ii 


May  it  not  with  propriety  be  here  stated  that,  if 
Mr.  Kruttschnitt  and  Mr.  Dumble  and  Mr.  Eberlein 
were  afflicted  with  the  ignorance  concerning  the 
lands  in  suit  which  they  as  witnesses  claimed  for 
themselves,  they  were  guilty  of  culpable  and  inex- 
cusable negligence?  All  of  them  knew  of  the  selec- 
tion list  and  necessarily  of  the  non-mineral  affidavit 
which  accom]3anied  it  without  which  no  patent  could 
issue.  If  Eberlein  had  been  negligent  in  ascertain- 
ing the  true  character  of  the  lands  in  suit  or  had 
purposely  refrained  from  causing  examinations  to 
be  made  in  order  that  his  mind  might  be  charged 
with  no  knowledge  of  their  character  at  the  time 
when  he  executed  and  tendered  the  several  non- 
mineral  affidavits,  the  government  would  be  legally 


386 

entitled  to  a  cancellation  of  the  patent.  A  false 
representation  may  be  made  in  contemplation  of 
law  without  actual  knowledge  of  either  its  truth  or 
falsity,  as  in  the  case  where  a  party  has  affirmed  his 
knowledge  by  a  positive  statement  that  implies 
knowledge;  or  when  made  under  circumstances  in 
which  he  ought  to  know,  if  he  did  not,  of  its  falsity, 
as  where,  having  special  means  of  knowledge,  it  is 
his  duty  to  know.  But  the  case  disclosed  by  the 
evidence  is  much  stronger  than  this.  It  appears 
that  Kruttschnitt,  Herrin,  Stone,  Cornish,  Owen, 
Markham,  Bumble  and  Eberlein  believed,  if  they 
did  not  know,  at  the  time  when  the  non-mineral 
affidavits  were  made  and  tendered,  that  the  lands  in 
suit  were  mineral  in  character.  Their  knowledge  or 
the  knowledge  of  any  one  of  them  was  the  knowl- 
edge of  appellants.  Reviewing  briefly,  it  is  quite 
clear  that  prior  to  Becember  10,  1903,  Mr.  Krutt- 
schnitt was  anxious  and  solicitous  in  regard  to  list 
89;  that  he  was  urging  prompt  action  in  arranging 
for  the  selection  and  believed  that  the  lands  were 
mineral  lands;  that  it  was  such  a  belief  on  his  part 
that  prompted  his  letter  to  Chambers  urging  special 
attention;  all  of  which  caused  Eberlein 's  declara- 
tion that  he  was  "particularly  anxious  in  regard  to 
this  list  as  the  lands  adjoin  the  oil  territory  and  Mr. 
Kruttschnitt  is  very  solicitous  in  regard  to  it".  It 
was  Mr.  Kruttschnitt  who  originated  the  organiza- 
tion of  the  Kern  Trading  &  Oil  Company  (R.  3085). 
He  held  many  conferences  with  Eberlein  in  the 
matter  of  securing  patents  (R.  3081).  It  was  his 
purpose  to  have  all  lands  that  were  considered  to  be 


387 

either  actual  oil  lands,  ]3robable  oil  lands  or  possible 
oil  lands  turned  over  to  the  Kern  Trading  &  Oil 
Company  so  that  it  could  control  them  (R.  3085). 
He  received  Dumble's  letter  of  November  20,  1903, 
enclosing  a  list  of  lands  to  be  leased  to  the  Kern 
Trading  &  Oil  Company  and  maps  (R.  3086).  This 
is  the  letter  in  which  Dumble  described  the  lands 
other  than  those  having  wells  on  them  as  "probable 
oil  lands"  (E.  2926-7).  (In  this  classification  came 
section  31  of  to^^Tiship  30-23  which  corners  with  the 
lands  in  suit.)  Each  important  step  in  this  matter 
was  referred  to  him.  He  first  learned,  he  said,  that 
land  in  township  30-23  had  been  selected  and  patent 
was  being  applied  for  when  this  lease  was  in  course 
of  preparation  (R.  3087).  He  knew  of  the  friction 
between  Eberlein  and  Dumble  w^ith  reference  to  the 
lease  (R.  3081). 

From  the  foregoing  it  is  established  by  Mr. 
Kruttschnitt 's  own  admissions  that  he  knew  of 
selection  list  89  and  knew,  while  it  was  pending, 
that  his  geologists  had  advised  the  inclusion  in  a 
lease  to  a  "fuel  oil  development"  company  (R. 
3081  )of  lands  in  the  unmediate  vicinity  of  the 
lands  described  in  list  89,  one  section  being  in  the 
same  township.  Complete  ignorance  on  his  part, 
therefore,  of  the  selected  lands  is  not  compatible 
with  the  high  order  of  intelligence  and  ability  nec- 
essary to  fit  one  for  the  discharge  of  the  duties  of 
the  responsible  position  filled  loy  Mr.  Kruttschnitt. 
Or  did  he,  by  closing  his  eyes  to  obvious  things, 
think  to  achieve  a  feat  paralleling  that  essayed  by 


388 

Eberlein  who,  knowing  all  that  the  lease  to  the  Kern 
Trading  &  Oil  Company  imported,  strove  to  absolve 
himself  from  the  responsibility  which  that  knowl- 
edge imposed  by  merely  declining  to  execute  it? 
After  three  years  Eberlein  denied  all  knowledge  of 
the  lease!  Was  Mr.  Kruttschnitt 's  memory  in  pari 
jMssu  with  that  of  Eberlein? 

CONCLUDING   SUMMARY. 

The  grant  under  which  appellants  claim  excepts 
from  its  operation  all  "mineral  lands",  the  broadest 
reservation  in  any  of  the  acts  of  Congress  affecting 
the  disposition  of  the  public  domain  except  the  home- 
stead act  under  which  by  a  late  amendment  the 
same  reservation  is  made.  In  Davis  vs.  Weihhold, 
139  U.  S.  507,  and  in  the  other  cases  urged  upon  the 
attention  of  the  court  by  appellants  the  exception 
is  more  restricted,  a  fact  pointed  out  by  Judge 
Hook  in  the  decision  of  the  Circuit  Court  of  Ap- 
peals for  the  Eighth  Circuit  in  the  Diamond  Coal 
and  Coke  Company  case,  191  Federal,  786,  and  by 
Judge  Ross  in  the  Cosmos  Exploration  Co.  case, 
104  Fed.  47.  In  the  Supreme  Court  of  the  United 
States  Mr.  Justice  Van  Devanter,  citing  as  authority 
Defehach  vs.  Hawke,  115  U.  S.  392;  Colorado 
Coal  &  Fuel  Co.  vs.  United  States,  123  U.  S. 
307;  Davis  vs.  Weihhold,  supra,  and  other  cases, 
announces  that,  to  justify  the  annulment  of  a  home- 
stead patent  as  wrongfully  covering  mineral  land, 
it  must  appear  that  the  Icnown  conditions  at  the 
time  of  the  proceedings  which  resulted  in  the  patent 
were  plainly  such  as  to  engender  the  belief  that  the 


389 

lands  contained  mineral  deposits  of  such  quality 
and  in  such  quantity  as  would  render  their  extrac- 
tion profitable  and  justify  expenditures  to  that  end. 
The  announcement  thus  made  in  this,  the  latest  and 
highest  authority  upon  the  question,  is  the  criterion 
by  which  is  to  be  determined  whether  the  lands  in 
this  case  were  in  contemplation  of  law  within  the 
exception  of  "mineral  lands"  in  the  grant  at  the 
time  of  the  proceedings  which  resulted  in  the  as- 
sailed patent.  It  is  the  resolution  by  the  Supreme 
Court  of  all  antecedent  cases  and  authorities  into 
the  doctrine  and  proposition  of  law  that  a  patent 
to  lands  as  agricultural  or  non-mineral  lands  will 
be  set  aside  when  it  distinctly  appears  that  the 
known  conditions  with  reference  to  them  were 
plainly  such  as  to  engender  the  belief  that  they 
were  valuable  mineral  lands  and  it  is  needless  and 
futile  to  review  the  authorities  thus  crystallized 
into  a  standard  by  which  the  question  in  this  case 
is  to  be  finally  decided.    223  U.  S.  236 ;  58  L.  Ed.  936. 

It  is  manifest  that  the  belief  described  in  the 
formula  extends  not  only  to  the  existence  of  the 
mineral,  but  to  its  quality  and  quantity.  If  ap- 
pellants do  not  depart  from  the  position  taken  by 
them  upon  the  argument  before  Judge  Bean,  they 
will  contend  here  that,  in  the  absence  of  absolute 
knowledge,  no  fraud  or  imposition  can  be  attributed 
to  them.  This  contention  begs  the  question.  The 
inquiry  is,  Were  the  known  conditions  with  refer- 
ence to  the  lands  in  suit  plainty  such  in  December, 
1904,  as  to  engender  the  belief  that  they  contained 


390 

commercial  oil?  It  was  accordingly  not  necessary 
for  the  government  to  show  that  the  lands  actually 
contained  oil  in  commercial  quantities,  but  only  that 
the  known  conditions  were  plainly  such  as  to  engen- 
der the  belief  that  the}^  did.  In  the  Diamond  Coal 
&  Coke  Company  case  there  was  no  evidence  that 
the  eve  of  man  had  ever  seen  an  ounce  of  coal  on 
the  lands  there  in  suit;  and  yet  the  Supreme  Court 
held  that  the  patent  in  that  case  should  be  annulled 
for  the  reason  that  the  evidence  proved  that  the 
known  conditions  there  were  plainly  such  as  to 
engender  the  belief  that  they  contained  commercial 
coal. 

In  the  case  of  United  States  against  Southern 
Pacific  Company  et  al.  pending  in  the  District  Court 
of  the  United  States  for  the  Southern  District  o± 
California — A  case  involving  questions  similar  to 
those  in  the  instant  case — the  defendants  on  a 
motion  to  dismiss,  heard  November  13,  1914,  put 
forward  the  same  contention  made  here.  Their 
counsel  then  said:  "To  sum  up,  our  position  is 
this:  Knowledge,  necessary  to  form  the  basis  of  a 
fraud  such  as  is  here  charged,  means  more  than 
mere  belief  or  hope  or  even  speculative  geological 
deduction.  It  can  be  derived  only  from  actual  dis- 
covery and  certain  demonstration." 

The  reductio  ad  ahsiirdum  of  the  contention  there 
made  and  here  repeated  is  reached  in  the  necessary 
conclusion  that,  if  upheld,  it  would  follow  that  the 
Southern  Pacific  Railroad  Company  would  under 
the  grant  of  July  27,  1866,  be  entitled  to  all  oil  lands 


391 

within  the  limits  of  the  grant  except  those  upon  the 
legal  subdivisions  of  which  wells  had  been  drilled 
prior  to  patent  from  which  oil  had  been  produced 
and  to  all  other  mineral  lands  upon  which  actual 
discover}^  of  minerals  in  paying  quantities  had  not 
been  made.  It  has  already  been  indicated  herein 
that  this  contention  is  identical  that  that  made  in 
the  Diamond  Coal  and  Coke  Company  in  the  Dia- 
mond Coal  and  Coke  Company  case.  Its  brief  is 
printed  in  connection  with  the  report  of  the  case  in 
volume  58  of  the  Lawvers'  Edition  of  the  United 
States  Supreme  Court  reports  and,  for  convenience, 
the  following  portions  thereof,  beginning  on  page 
936  thereof,  are  set  out: 

(a)  "The  construction  given  to  statutes  by 
those  charged  with  the  duty  of  executing  them 
is  always  entitled  to  the  most  respectful  con- 
sideration and  should  not  be  overruled  without 
cogent  reasons." 

(b)  "The  established  practice  of  the  Land 
Office  which  should  be  regarded  as  a  rule  of 
property  has  been  to  deny  entries  of  lands  as 
coal  lands  or  mineral  lands  unless  the  same  are 
shown  to  contain  within  their  limits  developed 
and  opened  mines,  or  deposits  of  coal  of  com- 
mercial value,  or  other  minerals  in  quantity 
sufficient  to  justify  the  development  and  ex- 
ploitation of  the  land,  and  to  render  it  more 
valuable  for  mineral  than  for  other  purposes; 
and  it  has  been  the  uniform  practice  to  require 
evidence  of  the  existence  of  coal  or  other  min- 
eral deposits  upon  the  land  itself.  The  fact 
that  the  land  was  surrounded  by  land  contain- 
ing either  coal  or  other  mineral  or  that  it  was 
adjacent  to  mineral  lodes  or  coal  veins  or  even 
that  the  land  itself  contained  small  quantities 


392 

of  mineral  or  surface  cropping  of  coal  unde- 
veloped, has  always  been  held  insufficient;  and, 
where  the  character  of  the  lands  as  mineral  or 
coal  lands  was  not  established  by  such  proof 
and  evidence  of  mineral  value,  the  land  has 
always  been  held  properly  enterable  under  the 
homestead  and  other  non-mineral  acts." 

(c)  "The  views  of  the  Land  Office  were  not 
erroneous;  on  the  contrary,  they  have  been  re- 
peatedly approved  by  the  decisions  of  this  court 
and  of  the  lower  Federal  courts  and  State  courts 
which  have  had  occasion  to  consider  the  ques- 
tions involved." 

(d)  "From  the  decisions  of  the  courts  and 
the  Land  Office,  we  believe  that  it  can  be  said 
without  successful  contravention,  that  the  fol- 
lowing propositions  are  firmly  established: 

*  *  *  *  * 

"Second,  in  order  to  bring  the  land  within 
the  allegations  of  the  bill,  that  is,  to  render  it 
only  enterable  under  the  coal  land  law,  it  must 
have  been  shown  that  it  contained  known  mines 
or  deposits  of  coal,  of  a  workable  character,  and 
of  sufficient  extent  to  make  the  lands  more  valu- 
able on  account  of  their  existence  for  coal  min- 
ing than  the  lands  would  be  for  agricultural 
purposes. 

"Third,  the  mere  presence  of  coal  croppings 
or  coal  mines  in  the  vicinity  of  the  lands  in 
question  cannot  detennine  the  character  which 
must  be  assigned  to  the  land.  On  the  contrary, 
it  must  be  judged  by  the  known  phj^sical  fea- 
tures of  the  identical  lands  in  question. 


yy 


It  has  already  been  shown  that  the  foregoing  con- 
tentions were  resolved  against  the  Diamond  Coal 
and  Coke  Comj^any  and  in  favor  of  the  goverimient. 


393 

The  learned  judge  before  whom  the  motion  to  dis- 
miss the  case  of  the  Undted  States  vs.  Southern  Pa^ 
cific  Company  et  al.  in  the  Southern  District  of  Cali- 
fornia was  argued  likewise  decided  the  contention 
in  that  case  against  the  defendants  and  in  favor  of 
the  government.     (225  Fed.  197.) 

Notwithstanding  the  decision  in  the  Diamond 
Coal  &  Coke  Company  case  and  the  adverse  rul- 
ing of  the  District  Judge  in  the  case  of  United 
States  vs.  Southern  Pacific  Co.  et  at.  in  the 
Southern  District  of  California  and  vet  other  de- 
cisions  of  like  character  appellants  fail  to  dis- 
criminate between  the  instant  case,  where  the  gov- 
erimient  charges  that  appellants  by  fraudulently 
representing  lands  to  be  non-mineral  in  character 
secured  patents  to  mineral  lands  in  violation  of  the 
terms  of  the  granting  act,  on  the  one  hand,  and  the 
cases  of  an  applicant  for  a  mineral  patent  who  is 
required  to  show  a  discovery  before  he  can  secure 
his  patent  and  of  a  contest  between  rival  mineral 
locators  where  it  is  required  that  a  showing  of  ptnor 
discovery  be  made  in  order  to  establish  a  right  to 
patent,  on  the  other  hand. 

The  case  of  Miller  vs.  Chrism  an,  140  Cal.  440; 
197  U.  S.  313,  upon  which  appellants  appear  to  rely, 
was  a  contest  between  two  rival  mineral  claimants 
and  consequently  can  have  no  application  or  bear- 
ing here.  By  section  2320  of  the  United  States 
Revised  Statutes  a  mineral  patent  can  only  be  ob- 
tained where  there  has  been  an  antecedent  location 


394 

perfected  by  "the  discovery  of  the  vein  or  lode 
within  the  limits  of  the  claim  located",  section  2329 
providing  for  placer  claims  "like  circmnstances  and 
conditions"  provided  for  vein  or  lode  claims.  Under 
such  circumstances  discovery  is  affirmatively  made 
the  sine  qua  von  of  patent;  but  the  doctrine  applies 
only  to  cases  involving  patents  under  the  public 
mineral  land  laws  of  the  United  States.  The  Su- 
preme Court  in  the  Diamond  Coal  and  Coke  Com- 
pany case  squarely  held  that  a  discovery  is  not  neces- 
sary to  constitute  land  mineral  land  in  cases  like  the 
one  now  under  review.  In  announcing  the  rule  that 
it  is  "the  known  conditions"  which  are  determi- 
native of  the  question  the  opinion  states  that  the 
argument  of  counsel  had  departed  from  "settled 
rules  of  decision  applicable  in  cases  like  this"  and 
that  therefore  "it  will  be  appropriate  to  recite  these 
rules  before  turning  to  the  evidence."  Thereupon 
the  court  laid  down  the  criterion  that  lands  are  min- 
eral lands  when  the  known  conditions  are  plainly 
such  as  to  engender  the  belief  that  they  contain  valu- 
able mineral  deposits. 

The  doctrine  in  question  is  not  new  in  the  Ninth 
Circuit,  but  has  long  been  recognized  here  as  well 
as  elsewhere  in  the  United  States. 

Co IV ell  vs.  Lammers,  21  Fed.  206; 

Francouer  vs.  Newliouse,  40  Fed.  621. 

In  both  of  the  foregoing  cases  Judge  Sawyer 
wrote  the  opinion  and  he  uses  this  language: 

By    the    words    (mineral    lands)    must    be 


II' 


395 

understood  lands  Iviiown  to  be  such  or  which 
there  is  satisfactory  reason  to  helieve  are  such 
at  the  time  of  the  grant  or  patent." 

Manifestly  the  language  just  quoted  negatives 
the  idea  that  the  discovery  of  minerals  in  paying 
quantities  must  be  made  before  lands  can  be  classed 
as  mineral  lands. 

In  Cosmos  Exploration  Co.  vs.  Gray  Eagle  Oil 
Co.,  104  Fed.  20,  Judge  Ross  recognized  and  gave 
expression  to  the  same  doctrine.  This  case  has 
already  been  reviewed  herein  and  pause  is  here 
taken  only  to  refer  to  the  fact  that  in  that  case,  as 
in  the  instant  case,  a  non-mineral  affidavit  w^as  filed. 
Judge  Eoss  found  that  the  parties  under  whom  the 
Exploration  Company  claimed  at  least  Relieved  that 
the  lands  which  they  sought  to  acquire  under  an 
agricultural  patent  or  selection  contained  oil  and 
held  that,  if,  instead  of  filing  false  non-mineral  affi- 
davits, they  had  made  known  to  the  land  officers  the 
fact  of  their  belief,  "no  one  can  doubt  that  the 
local  land  officers  would  have  refused  to  file  or  re- 
ceive the  application."  Judge  Eoss  stated  that,  if 
under  such  circumstances  the  selectors  had  obtained 
patents,  the  patents  would  have  been  cancelled  at 
the  suit  of  the  govermnent,  citing  Finn  vs.  Hoyt, 
52  Fed.  83,  when  in  fact  he  had  in  mind  United 
States  vs.  Ctdver. 

In  United  States  vs.  Cidver  the  government  sought 
to  cancel  certain  patents  issued  pursuant  to  cash 
entrv  from  which  mineral  lands  were  excluded.    It 


396 

appeared  that  the  parties  had  personally  examined 
the  lands  and  had  had  them  examined  by  a  mineral 
expert  who  reported  to  them  his  belief  as  to  their 
true  mineral  character.    The  Court  said  in  part: 

"Their  act  in  buying  them  by  cash  entry  as 
agricultural  land,  with  such  knowledge  as  to 
their  true  character,  would  vitiate  the  sale  by 
the  government  to  these  parties,  and  they  would 
not  be  entitled  to  hold  the  land  because  of  the 
fraud  perpetrated  by  them  upon  the  officers  of 
the  government.  It  is  claimecl  by  the  defendant 
that  these  lands  were  thrown  open  to  purchase 
bv  cash  entry  by  the  proclamation  of  President 
Rutherford  B.  Hayes,  of  October  8,  1877.  If 
they  were  lands  valuable  for  mineral,  they 
were  not  so  thrown  open  to  purchase  by  the 
said  proclamation,  as  the  same  expressly  ex- 
empted from  sale  'all  lands  appropriated  by 
law  for  the  use  of  schools,  military  or  other 
purposes. '  *  *  *  if  there  had  been  no  fraudu- 
lent concealment  by  Culver  and  Julian  Ramse}^, 
but,  under  the  law,  the  lands  were  reserved 
from  sale,  the  rule  is  well  settled  that  the  de- 
defendants  obtained  no  title  by  their  purchase; 
that  the  sale  is  absolutelv  void.  Morton  vs. 
Nebraska  (21  Wall.  660).  "*  *  *  The  prepon- 
derance of  evidence  shows  that  the  lands  were 
valuable  for  mineral,  and  that  the  defendant 
Culver  and  Julian  Ramsey,  the  ancestor  of  the 
other  defendants,  knew  this  fact  at  the  time  of 
the  purchase  of  the  land. 

"Upon  both  grounds  above  set  out  the  patent 
must  be  held  void,  and  a  decree  should  be  en- 
tered for  the  cancellation  of  the  same,  and  it  is 
so  ordered." 

It  is  submitted  that  the  evidence  in  the  instant 
case  at  all   points   fulfills   the   requirement   of   the 


397 

standard  laid  down  by  the  Supreme  Court.  In 
short,  the  goverinnent  has  proven  by  that  class  of 
evidence  which  commands  respect  and  that  amount 
of  it  which  produces  conviction  the  following  propo- 
sitions : 

1.  That  the  test  laid  down  by  the  Supreme  Court 
in  the  Diamond  Coal  and  Coke  Company  case  with 
reference  to  coal  lands  is  likewise  applicable  to  oil 
lands. 

2.  That  the  structure  of  the  lands  in  suit  is 
ideally  favorable  to  the  accumulation  and  retention 
of  oil. 

3.  That  the  lands  in  suit  were  in  a  recognized 
oil  belt  and  were  surrounded  on  all  sides  by  surface 
evidences  and  exposures  of  oil,  gas,  asphaltmn 
and  brea. 

4.  That  oil  development  in  the  vicinity  of  the 
lands  in  suit  had  reached  such  proportions  in  1904 
that  from  McKittrick  to  Sunset,  a  distance  of  thirty 
miles,  there  were  two  hundred  and  eighty-one  pro- 
ducing wells,  a  number  of  them  being  within  two  or 
three  miles  of  the  lands  in  suit. 

5.  That  the  strata  of  oil-bearing  sands  out- 
cropping in  the  exposures  mentioned  and  proved  by 
the  wells  mentioned  to  contain  oil  in  commercial 
quantities  dipped  and  extended  towards  and  under 
and  beyond  the  lands  in  suit. 

6.  That  the  lands  in  suit  themselves  showed 
surface  evidences  of  the  presence  of  oil  underneath, 


398 

being  situate  upon  a  fold  or  anticline  which  is  a 
continuation  of  the  fold  or  anticline  at  the  westerly 
end  of  which  in  1904  there  were  two  producing  oil 
wells  and  along  whose  extension  towards  the  lands 
in  suit  there  were  exposures  of  oil-sands  impreg- 
nated with  oil  and  asphaltum. 

7.  That  the  lands  in  suit  had  no  value  for  agri- 
curtural  purposes  and  only  negligible  value  for 
grazing  purposes  and  were  practically  worthless  un- 
less valuable  for  oil. 

8.  That  by  reason  of  these  conditions  the  belief 
was  general  in  1904  that  the  lands  in  suit  were  oil 
lands,  this  belief  manifesting  itself  in  many  at- 
tempts to  locate  the  lands  under  the  mineral  land 
laws  of  the  United  States  by  persons  skilled  and 
unskilled  in  oil  geology  and  oil  development. 

9.  That  appellants  themselves  believed  in  1904 
in  the  oil  character  of  the  lands  in  suit,  as  shown 
b}^  the  declarations,  admissions  and  acts  of  their 
skilled  and  trained  geologists  who  examined  and 
investigated  the  lands  in  suit  and  in  some  instances 
sought  to  acquire  them  for  themselves,  as  well  as 
by  the  acts  and  declarations  of  other  responsible  offi- 
cials. 

10.  That  appellants,  in  order  to  secure  patent  to 
the  lands  in  suit  under  an  act  of  Congress  granting 
to  them  only  agricultural  lands,  expressly  excepting 
mineral  lands  from  the  operation  thereof,  believ- 
ing them  to  be  mineral  lands,  not  only  withheld  the 


399 

knowledge  which  they  had  of  their  true  character, 
but  falsel}^  and  fraudulently  represented  them  to  be 
non-mineral  agricultural  lands  of  the  character 
contemplated  b}^  the  grant,  the  evidence  of  these 
facts  consisting  of  the  acts,  declarations  and  admis- 
sions of  responsible  officials  and  agents  of  ap- 
pellants, as  also  of  a  series  of  letters  and  documents 
bearing  positive  and  direct  witness  to  the  knowledge 
and  belief  of  appellants  of  and  in  the  oil  character 
of  the  lands  in  suit  and  their  design  and  purpose  to 
deceive  the  land  officers  of  the  government  in  regard 
thereto. 

In  addition  to  the  foregoing  it  is  submitted  that 
it  has  been  clearlv  shown  herein  bv  reference  to 
the  evidence  and  undoubted  facts,  as  well  as  to  the 
pertinent  authorities,  that  prior  to  patent  the  gov- 
ernment neither  investigated  nor  ascertained  the 
true  character  of  the  lands  in  suit,  but  had  the  right 
to  rely  upon  and  did  rely  upon  and  was  deceived 
by  the  proofs  offered  by  appellants. 

As  stated  at  the  outset  of  this  brief,  the  govern- 
ment is  mindful  of  the  respect  due  to  its  patent,  the 
presumption  that  all  the  preceding  steps  required 
by  law  were  duly  observed  and  the  requirement 
that,  in  order  to  annul  the  patent  here  called  into 
question,  it  must  bear  the  burden  of  proof  and  sus- 
tain it  hj  that  class  of  evidence  that  commands  re- 
spect and  that  amount  of  which  produces  convic- 
tion; and  the  government  confidently  submits  that 
it  has  successfully  met  these  tests  and  that,  even  if 


400 

the  question  were  now  one  of  first  impression  and 
to  be  decided  originally  by  this  appellate  court,  it 
must  be  resolved  in  its  favor;  a  fortiori  should  it  be 
so  resolved  in  view  of  the  presumptive  correctness 
of  the  decision  of  the  trial  court  the  judge  of  which 
had  before  him  for  his  guidance  the  full  transcript 
of  the  evidence  by  questions  and  answers,  which  in 
this  court  is,  under  the  rules  of  practice  in  equity, 
presented  in  condensed  form,  in  many  instances  no 
more  than  the  mere  substance  being  stated. 

PART  II. 

DEVELOPMENT  SUBSEQUENT  TO  PATENT 
ON  EVEN-NUMBERED  OR  NON-RAILROAD  SEC- 
TIONS ADJOINING  THE  LANDS  IN  SUIT. 

From  Part  I  of  this  brief  the  government  has 
sought  to  exclude  reference  to  all  evidence  of  trans- 
actions occurring  and  knowledge  derived  after  the 
issuance  of  the  assailed  patent.  It  is  pointed  out 
in  the  Diamond  Coal  and  Coke  Company  case  that, 
since  applicants'  proofs  and  the  findings  of  the 
land  officers  were  directed  to  the  situation  at  the 
time  of  the  issuance  of  patent,  so  the  inquiry  by 
the  court  as  to  the  question  of  mineral  character 
must  be  directed  to  the  situation  at  that  time.  In 
that  case  there  was  evidence  that  after  patent  a 
slope  was  driven  from  the  outcrop  of  coal  to  the 
east  to  within  five  feet  of  the  vertical  boundary  of 
one  of  the  sections  in  suit  ''and  in  good  coal  all  the 
way";  but  the  court  held  that  while  this  was  "a 


401 

fact  proved",  it  was  not  to  be  considered  "because 
in  the  nature  of  a  discovery  subsequent  to  the  en- 
tries". 

Accordingly,  when  appellants  undertook  at  the 
trial  to  introduce  evidence  concerning  wells  drilled 
in  the  Elk  Hills  (but  not  upon  the  specific  lands  in 
suit)  in  1910  and  thereafter,  the  government  took 
the  position  that  the  evidence  was  incompetent. 
This  evidence  was  offered  prior  to  the  decision  of 
the  case  in  question  under  the  authority  of  which 
it  is  clearly  incompetent  and  "not  to  be  considered 
here".  However,  while  it  was  introduced  by  ap- 
pellants for  the  assigned  purpose  of  proving  the 
non-mineral  character  of  the  lands  in  suit,  it  has  the 
opposite  effect  and  demonstrates  that  upon  lands 
lying  in  the  midst  of  the  several  sections  in  suit 
successful  and  productive  oil  wells  were  drilled  in 
1910  and  in  1911  by  the  Associated  Oil  Company,  a 
subsidiary  of  the  Southern  Pacific  Company.  It  is, 
accordingly  the  office  of  Part  2  of  this  brief  to 
point  out  both  the  utter  failure  of  appellants  to 
prove  by  the  evidence  in  question  the  non-mineral 
character  of  the  lands  and  the  notable  effect  of  the 
evidence  in  corroborating  the  competent  evidence 
of  their  mineral  character. 

By  way  of  parenthensis,  it  may  not  be  out  of 
place  to  comment  on  the  position  taken  by  appel- 
lants with  regard  to  this  matter.  That  position 
necessarily  is  that,  even  if  the  kno'^m  conditions 
prior  to  patent  were  such  as  to  engender  the  belief 


402 

that  the  lands  were  mineral  in  character  and  even  if 
they  practiced  fraud  in  acquiring  patent  to  them, 
nevertheless,  if  subsequent  to  patent  there  have  been 
developments  which  tend  to  negative  mineral  char- 
acter, the  government  ought  not  to  succeed  in  this 
suit  for  the  reason  that  it  has  not  been  damaged. 
Appellants'  argument  amounts  to  this:  However 
cogent  was  the  proof  by  the  known  conditions  prior 
to  patent  of  the  mineral  character  of  the  lands  and 
however  fraudulent  may  have  been  their  eiforts  to 
secure  patent  to  them,  they  ought  not  be  penalized 
for  a  mistake  of  their  officers  and  sen^ants  in  rely- 
ing upon  the  known  conditions  and  in  believing  that 
they  were  securing  patent  to  interdicted  mineral 
lands.  The  evidence  which  they  introduced  to  this 
end,  far  from  subserving  the  purpose  for  which  it 
was  introduced,  will  be  shown  to  have  reacted  and 
demonstrated  the  combination  in  certain  officers  and 
servants  of  appellants  at  the  time  of  the  proceed- 
ings which  resulted  in  patent  of  good  judgment  and 
bad  morals. 

In  addition,  the  evidence  in  question  absolutely 
demonstrates  the  soundness  and  correctness  of  the 
position  of  the  government  that  the  evidence  proves 
that  the  known  conditions  were  plainly  such  as  to 
engender  the  belief  that  the  lands  in  suit  were  valu- 
able oil  lands.  This  necessarily  follows  from  the 
fact  that  the  Associated  Oil  Compan}^  a  subsidiary 
of  the  Southern  Pacific  Company,  in  1910  and  with- 
out addition  to  the  sum  of  human  knowledge  in 
1904  concerning  the  lands  in  suit  entered  upon  the 


403 

development  of  them  and  expended  in  that  enter- 
prise, as  appellant'  witnesses  have  testified,  more 
than  half  a  million  dollars  (R.  3123).  The  position 
of  the  government  is  that  these  known  conditions 
were  plainly  such  as  to  justify  expenditures.  The 
proof  by  appellants  is  that  their  subsidiary  enter- 
tained that  opinion  and,  having  faith  in  it,  spent 
five  hundred  thousand  dollars.  To  adopt  Mr.  Jus- 
tice Van  Devanter's  phrase  concerning  the  Dia- 
mond Coal  and  Coke  Company,  "The  Associated  Oil 
Co.  was  a  joractical  concern  operated  by  practical 
men.  It  was  hardly  intending  to  make  an  aimless 
or  grossly  excessive  expenditure".  Nevertheless, 
wdth  no  greater  knowledge  or  information  than  that 
possessed  by  Blodgett,  Youle,  Ow^en  and  Treadwell 
in  1904,  because  of  belief  and  faith  in  the  oil  char- 
acter of  the  Elk  Hills  it  spent  lavishly  of  its  stock- 
holders' money  and,  while  it  ceased  operations  on 
some  of  its  wells  because  of  poor  judgment  in  locat- 
ing them,  it  succeeded  in  bringing  in  three  com- 
mercially productive  wells. 

Appellants  will  doubtless  assert  that  prior  to 
the  Associated  Oil  Company's  operations  in  the  Elk 
Hills  a  large  well  had  been  brought  in  in  the  Buena 
Vista  Hills  by  the  Honolulu  Oil  Company  and  that 
this  fact  w^as  a  contribution  to  knowledge  of  the 
conditions  in  the  Elk  Hills.  They  have  heretofore 
deprived  themselves  of  the  use  of  this  contention 
by  the  evidence  of  their  expert  geologist  and  wit- 
ness, F.  M.  Anderson,  who  testified,  as  already 
shown,  that  there  is  absolutely  no  connection  be- 


404 

tween  the  two  uplifts,  tlie  Bueiia  Vista  Hills  and 
the  Elk  Hills,  and  that  the  formations  in  the  two 
are  in  nowise  correlated.  By  reference  to  this 
position  the  government  does  not  mean  to  agree 
with  it  and  only  cites  it  because  of  the  fact  that  it 
prevents  appellants  from  now  saying  that  a  success- 
ful well  in  the  Buena  Vista  Hills  is  evidence  of  oil 
in  the  Elk  Hills.  Indeed,  both  Anderson  and  Ochs- 
ner  testified  to  their  firm  belief  and  conviction 
of  the  high  character  of  the  Buena  Vista  Hills  as 
oil  lands  in  1904  at  the  very  time  when  they  now  say 
they  condemned  the  Elk  Hills.  Moreover,  as  already 
shown,  there  were  in  1904  producing  Avells  two,  three 
and  four  miles  from  the  lands  in  suit,  while  the 
Honolulu  well  is  in  section  10  of  township  32-24, 
nine  miles  distant  from  the  nearest  of  the  lands  in 
suit.  It  is  not  easy  to  believe  that  "a  practical  con- 
cern" like  the  Associated  Oil  Company  was  influ- 
enced by  the  psychology  of  panic  and  excitement 
following  the  Honolulu  discovery,  as  appellants 
have  endeavored  to  explain  the  enterprise  of  others 
in  locating  oil  lands.  The  argument  from,  psy- 
chology will  hardly  reach  the  Associated  Oil  Com- 
pany, the  chairman  of  whose  board  of  directors  is 
shown  by  the  evidence  to  have  been  Mr.  Wm.  F. 
Herrin,  who  was  likewise  general  counsel  of  the 
Southern  Pacific  Company.  The  record  shows  that 
Mr.  Herrin  was  present  and  presided  at  sundry 
meetings  of  the  executive  committee  of  the  board  of 
directors  of  the  Associated  Oil  Company  when  the 
questions  of  operations  and  expenditures  in  the  Elk 
Hills  were  up  for  consideration   (R.  3613-47). 


405 

Passing  from  manifest  things  to  the  evidence 
concerning  the  result  of  the  operations  upon  the 
even-numbered  sections  in  the  Elk  Hills,  it  is  dis- 
closed that  on  three  of  them,  24  and  26  of  30-23  and 
30  of  30-24,  which  will  hereinafter  be  referred  to 
as  24,  26  and  30,  respectively,  large  and  successful 
producers  were  drilled.  Some  wells  were  drilled  by 
the  Associated  Oil  Company  and  other  concerns  that 
did  not  prove  successful;  but  in  this  comiection  let 
it  be  remembered  that  there  is  probably  not  in  the 
entire  world  an  oil-field  in  which  there  are  not  un- 
successful wells. 

On  September  2,  1912,  by  executive  order  the 
President  of  the  United  States  withdrew  and  re- 
sented the  lands  in  this  suit  and  the  adjoining  and 
continguous  sections  of  land  in  township  30-23  and 
18  sections  in  other  townships  in  the  Elk  Hills,  in 
all  42  sections,  to  be  held  for  the  exclusive  use  and 
benefit  of  the  United  States  Xavy.  This  withdrawal 
was  based  on  geological  investigations  of  Eobert 
Anderson  and  other  geologists  of  the  United  States 
Geological  Survey.  In  August,  1912,  after  stating 
that  Mr.  A.  C.  Veatch  and  Dr.  John  Casper  Bran- 
ner  had  considered  the  lands  in  this  suit  as  probably 
oil  lands,  Mr.  Anderson  in  a  report  to  the  United 
States  Geological  Survey,  in  which  he  referred  to 
the  wells  drilled  in  the  Elk  Hills  which  had  not 
proven  successful,  stated  that  he  believed  that  in 
most  cases  the  tests  were  not  adequate,  but  called 
attention  to  the  three  successful  wells  of  the  Asso- 
ciated   Oil    Company    which    he    understood    from 


406 

varying  reports  would  produce  from  forty  to  five 
hundred  barrels  of  oil  per  dav  of  from  27  to  29 
degrees  gravity  (Ex.  5-T). 

In  November,  1912,  Mr.  Anderson  reported  re- 
sults of  a  recent  visit  to  the  Elk  Hills  and  stated 
that  it  was  his  opinion  that  the  area  would  yield  a 
large  quantity  of  oil  which,  to  be  conservative,  he 
estimated  at  100,000,000  barrels  (Ex.  5-V).  He 
had  originally  estimated  the  oil  content  of  the  Naval 
Reserves  to  be  250,000,000  barrels.  In  this  report 
he  refers  to  the  various  wells  that  had  been  drilled 
in  the  Elk  Hills  region  and  came  to  the  conclusion 
that  the  southwest  fringe  of  the  hills,  along  which 
were  drilled  the  unsuccessful  wells,  would  not  be  as 
productive  as  the  sununit  region  where  the  lands  in 
suit  lie.  He  then  proceeds  to  say  that  the  only  three 
wells  drilled  to  an  adequate  depth  in  the  central 
part  of  the  hills  were  those  of  the  Associated  Oil 
Company  and  that  each  of  these  struck  zones  in 
which  the  oil  was  under  pressure  and  spouted,  that 
on  section  30  having  produced  at  least  150  to  300 
barrels  per  day  for  several  days  and  then  sanded 
up ;  another  on  section  24  having  come  in  at  the  rate 
of  a  thousand  barrels  per  day  and  having  yielded  an 
average  of  200  l^arrels  per  day  for  a  week  and  also 
sanded  up  (R.  Ex.  o-Y).  He  also  reported  that 
showings  of  oil  had  been  found  in  almost  every  one 
of  the  deep  wells  in  the  hills,  proving  that  a  con- 
siderable amount  of  oil  is  disseminated  through  the 
strata,  and  indicated  that  a  more  productive  source 
mav  occur  below. 


407 

In  the  further  discussion  of  this  question  this 
brief  will  separate  the  successful  and  unsuccessful 
wells  and  will  first  proceed  to  set  out  the  evidence 
which  shows  that  the  former  justified  the  expendi- 
tures involved  in  their  drilling  and  place  beyond 
question  or  peradventure  the  oil  character  of  the 
lands  in  suit,  and  will  follow  with  the  details  of  the 
evidence  concerning  the  unsuccessful  wells  showing 
the  reasons  for  their  failure. 

SUCCESSFUL  WELLS  OF  THE  ASSOCLA.TED  OIL  COMPANY. 

There  is  no  question  whatever  that  in  1910  and 
1911  the  Associated  Oil  Company  was  a  subsidiary 
of  the  Southern  Pacific  Company,  the  latter  owning 
and  holding  a  majority  of  its  capital  stock  (R. 
3593).  Mr.  Wm.  F.  Herrin  was  general  counsel 
and  a  director  of  the  Southern  Pacific  Company 
and  at  the  same  time  president  and  a  director  of 
the  Associated  Oil  Company  and  chairman  of  its 
executive  committee  (R.  1392,  1400;  3107-8,  11-12; 
3597-8;  3602-3-4-5;  3613-47).  P.  G.  Williams,  who 
testified  first  as  a  witness  for  appellants,  was  called 
by  the  government  in  rebuttal  on  November  28, 
1913.  He  was  secretarv  and  auditor  of  the  Asso- 
ciated  Oil  Company  and  had  general  custody  of  the 
records  of  the  corporation  including  the  minutes  of 
meetings  of  the  board  of  directors,  the  executive 
committee  and  stockholders,  as  also  the  annual 
statements  issued  by  the  company  from  the  date  of 
its  organization,  October,  1901,  to  the  year  1912. 
The  annual  statements  for  the  several  vears  show 
the  officers  throughout  that  time  and  are  set  out  on 


408 

page  3593  et  scq.  of  the  record.  The  minutes  of  the 
meetings  of  the  executive  committee  of  the  board  of 
directors  were  read  into  the  record  and  are  found 
on  page  3613  et  seq. 

These  minutes  contain  and  expose  the  history  of 
the  proceedings  by  which  the  Associated  Oil  Com- 
pany acquired  possession  of  the  lands  in  question 
and  the  successive  steps  in  the  matter  and  progress 
of  drilling  on  sections  24,  26  and  30.  At  practically 
all  of  the  meetings  Mr.  Wm.  F.  Herrin  presided. 
It  is  interesting  to  note  that  on  March  21,  1911,  it 
was  reported  to  the  committee  by  the  general  man- 
ager that  the  mineral  filings  on  which  the  company's 
title  was  based  were  made  subsequent  to  September 
27,  1909,  the  date  of  the  withdrawal  by  President 
Taft  of  a  large  area  of  land  including  all  of  the  Elk 
Hills.  Finding  that  other  persons,  Messrs.  Mc- 
Kittrick,  Jastro,  Tevis  and  others,  of  Bakersfield, 
had  located  sections  24,  26  and  30  prior  to  September 
27,  1909,  for  fuller 's-earth,  the  general  manager 
recommended  the  acquisition  of  the  McKittrick  et  al. 
titles  "for  the  reason  that  they  were  made  prior  to 
September  27,  1909",  and  because  the  work  which 
the  Associated  had  already  done,  if  applied  against 
these  filings,  would  insure  the  issuance  of  a  patent 
to  the  Associated  upon  the  discovery  of  oil  on  each 
quarter-section,  which,  to  use  the  general  manager's 
own  words,  "I  think  probable".  The  proceedings 
with  reference  to  this  matter  and  the  consequent 
action  are  set  out  on  pages  3623-4-5-6  of  the  record. 


409 

The  ''Messrs.  Mc  Kittrick,  Jastro,  Tevis  et  al.  of 
Bakersfield"  were  the  gentlemen  who  claimed  ad- 
versely to  the  Associated  Oil  Company  and  whose 
application  for  patent  based  upon  an  alleged  dis- 
covery of  fuller 's-earth  was  protested  by  the  parties 
under  whom  the  Associated  claimed,  leading  to  the 
contest  in  the  Land  Office  at  Visalia  in  which  the 
officers  and  servants  of  the  Associated  Oil  Com- 
pany, including  L.  J.  King,  its  superintendent, 
W.  A,  Williams,  its  chief  geologist,  testified  that 
these  lands  were  oil  lands  and  chiefly  valuable  as 
such;  that  there  was  no  commercial  fuller 's-earth  in 
them;  that  the  Associated  Oil  Company  had  drilled 
successful  Avells  and  that  such  wells  as  had  been 
drilled  elsewhere  in  the  Elk  Hills  and  were  unsuc- 
cessful had  failed  to  get  oil  in  commercial  quantities 
because  of  unfavorable  location,  errors  in  drilling  or 
for  other  reasons  (Exhibits  9-C,  9-E,  9-M  and  9-0). 

In  the  meantime  drilling  was  proceeding  and  on 
August  29,  1911,  the  general  manager  advised  the 
committee  that  he  had  issued  instructions  to  pro- 
ceed with  the  drilling  of  wells  No.  3  on  24  and  well 
No.  1  on  30;  and,  with  reference  to  the  well  on  26, 
to  discontinue  work  as  soon  as  the  field  department 
had  completed  perforating  the  well  and  testing  it 
to  see  the  result  (R.  3633).  He  also  gave  in- 
structions to  stop  work  on  certain  specified  wells 
(R.  3633).  The  explanation  of  the  order  for  the 
cessation  of  work  on  the  specified  wells  appears  in 
the  minutes  of  the  meeting  of  Novemberr  28,  1911 
(R.  3637).  At  that  meeting  the  general  manager 
reported  in  part  as  follows: 


410 

"This  well  on  section  30  is  now  3,836  feet 
deep,  having  passed  through  12  feet  of  oil 
stratum  at  2,713  feet.  We  have  already  ex- 
pended on  the  five  sections  of  land  which  we 
hold  under  lease  in  Elk  Hills  $418,000.  The  Field 
Department  advises  that  if  we  forfeit  these 
leases,  apj^lying  for  patents  on  the  160  acres  in 
sec.  26  and  the  160  acres  in  sec.  30,  on  which  we 
have  made  discoveries  of  oil  that  we  can  remove 
material  which  will  effect  a  salvage  of  approxi- 
mately $100,000,  the  net  result  being  that  we 
would  be  in  position  to  ask  for  patents  on  160 
acres  in  sec.  26  and  160  acres  in  sec.  30,  which 
will  be  done  at  once,  and  doing  no  further 
work  on  any  of  the  other  lands.  Under  those 
conditions  these  two  wells  will  have  cost  us 
$318,000,  provided  the  salvage  is  $100,000,  as 
stated  above.  Our  legal  department  is  unable 
to  advise  us  definitely  what  the  action  of  the 
Interior  Department  will  be  in  regard  to  these 
lands,  but  construes  the  Pickett  bill  to  mean 
that  in  order  to  hold  lands  and  eventually  ac- 
quire patent  thereto,  we  must  legitimately  carry 
on  the  work  on  each  of  the  twenty  quarter-sec- 
tions involved  in  a  manner  to  make  a  discovery 
of  oil.  This  would  mean  that  to  be  safe  we  must 
select  these  quarter-sections  at  tliis  time  on 
which  we  deem  it  advisable  to  carry  on  such 
work.  The  work  on  each  quarter-section  would 
cost  approximately  $5,000.00  per  month  in  order 
to  conform  to  this  construction  and  if  work  is 
carried  on  on  the  eighteen  quarter-sections 
on  which  discovery  has  not  been  made  this 
would  mean  an  expenditure  of  approximate! v 
$90,000.00  monthly.  There  are  also  r^onflicting 
mineral  claims  on  these  lands  o^Mied  by  other 
parties  who  claim  title  by  reason  of  discovery  of 
fuller 's-earth.  These  claimants  are  carrying 
on  work  on  each  quarter-section  and  have  made 
applications  for  patent  on  portions  of  sections 


411 

24  and  30.    We  would  be  obliged  to  contest  these 
applications  in  the  Land  Office. 

''In  view  of  the  uncertainty  as  to  the  status  of 
our  right  to  obtain  patents  to  any  of  these  lands, 
even  if  discovery  is  made,  I  recommend  that  we 
discontinue  work  entirely  on  these  lands  with 
the  exception  of  the  pumping  of  well  on  section 
26  and  the  deepening  of  well  on  section  30." 
(R.  3638-9-40.) 

The  foregoing  recommendation  of  the  general 
manager  was  approved  (R.  3640). 

The  Pickett  bill  referred  to  is  the  Act  of  Congress 
of  June  25,  1910,  by  which  it  was  provided,  among 
other  things,  that  withdrawals  of  public  lands  should 
not  impair  the  rights  of  claimants  or  occupants 
who  at  the  date  of  the  withdrawal  were  in  the 
diligent  prosecution  of  work  leading  to  discovery 
and  thereafter  continued  in  such  diligent  prose- 
cution of  work  until  discovery.  It  is  therefore 
manifest  that  the  reason  for  the  cessation  of  work 
on  wells  other  than  the  three  wells  now  under  re- 
view lay  in  the  fact  that  the  so-called  locations 
under  which  the  Associated  Oil  Company  claimed 
were  made  after  the  withdrawal  of  September  27, 
1909,  a  fact  pointed  out  and  admitted  in  the  minutes 
of  the  meeting  of  December  20,  1910  (R.  3622). 

For  the  purpose  of  showing  the  non-commercial 
character  of  the  three  deep  wells  of  the  Associated 
Oil  Company  in  the  Elk  Hills  appellants  called  as 
a  witness  that  company's  auditor,  P.  G.  Williams 
(R.  3122),  who  testified  that  to  December  31,  1912, 
the   well   on   24    cost   $56,000.00,    that    on   26    cost 


412 

$57,000.00  and  that  on  30  cost  $66,000.00  (R.  3124). 
This  witness  stated  that  he  had  prepared  from  the 
record  of  his  compan}^  a  tabulation  of  the  pro- 
duction of  its  wells  in  the  Elk  Hills,  these  tabu- 
lations being  made  up  from  regular  reports  or  letters 
of  advice  sent  in  by  the  superintendent  in  charge 
from  time  to  time.  He  thereupon  offered  the 
tabulation  of  the  production  of  each  of  the  wells 
(R.  3125-6).  Following  Mr.  Williams  came  Mr. 
W.  E.  White,  crief  clerk  of  the  chief  engineer  of 
the  Associated  Oil  Company,  A.  F.  L.  Bell.  White 
testified  that  from  reports  made  to  the  office  of  the 
Associated  Oil  Company  from  the  field  force  he  had 
made  certain  graphic  logs  of  the  three  deep  wells  in 
question  and  these  so-called  graphic  logs  were  intro- 
duced in  evidence  by  appellants  for  the  purpose  of 
showing  the  history  of  the  drilling  and  production 
of  the  wells.  They  are  Exhibits  172-3-4.  By  refer- 
ence to  pages  3159  et  seq.  of  the  record  it  will  be 
seen  that  counsel  for  appellants  desired  to  intro- 
duce these  so-called. graphic  logs  instead  of  introduc- 
ing the  original  reports  from  which  the  witness 
stated  that  he  had  made  them.  Counsel  for  the 
government  objected  to  the  introduction  of  the 
so-called  graphic  logs  unless  the  original  drilling 
reports  which  counsel  for  appellants  stated  that  he 
then  had  with  him  in  court  were  introduced.  There- 
upon counsel  for  the  government  offered  in  evidence 
the  drilling  reports  in  question  and  they  are  con- 
tained in  the  volume  of  "Documents  and  Evidence 
Not  Printed".  Subsequently,  it  will  be  seen  by 
reference  to  page  3196,  these  drilling  reports  were 


413 

read  into  the  record  by  counsel  for  the  government. 
An  examination  of  them,  the  original  records  and 
reports  from  the  field,  shows  a  condition  of  affairs 
and  production  radically  different  from  and  con- 
tradictory of  that  shown  on  the  so-called  graphic 
logs  and  diagrammatic  charts  prepared  by  the 
witnesses  White  and  Williams  and  introduced  bv 
appellants.  It  was  the  evident  purpose  of  these  logs 
and  charts  to  minimize  the  productive  capacity  of 
the  three  wells  in  question;  but  the  drilling  reports 
themselves  speak  the  real  truth  as  to  this  matter 
and,  accordingly,  a  more  or  less  detailed  exami- 
nation or  analysis  of  these  is  necessary. 

Exhibit  172  is  the  graphic  log  or  production  chart 
of  sections  30  of  30-24  ]3repared  by  the  witness 
White,  as  he  said,  from  the  daily  drilling  reports 
(E.  3159). 

Exhibit  173  is  a  similar  log  or  production  chart 
of  section  26  of  30-23  (R.  3167-8). 

Exhibit  174  is  a  similar  log  or  production  chart  of 
the  well  on  section  24  of  30-23  (R.  3168). 

On  these  logs  or  charts  the  witness  stated  that  he 
attempted  to  make  a  condensation  of  several  hun- 
dred daily  drilling  reports.  Necessarily,  this  process 
called  for  an  interpretation  by  him  of  the  meaning 
of  the  daily  drilling  reports.  His  cross-examination, 
beginning  at  page  3191  and  covering  more  than  a 
hundred  pages,  discloses  many  admissions  of  mis- 
takes, inaccuracies  and  errors  of  interpretation  on 


414 

Ms  part.  The  details  are  so  great  that  it  would 
unduly  prolong  this  brief  to  set  them  out.  It  matters 
little  to  the  court  what  construction  or  interpretation 
the  chief  clerk  to  an  engineer  of  the  Associated 
Oil  Company  placed  upon  the  daily  records  of 
drilling  and  production  made  by  the  men  in  the 
field  in  charge  of  the  work  and  transmitted  con- 
temporaneously to  headquarters. 

L.  J.   King  was  superintendent   of  the  Midway 
division  of  the  Associated  Oil  Company,  which  in- 
cludes the  Elk  Hills  (R.  3155),  and  it  was  by  him 
that  daily  reports  of  the  drilling  operations  on  the 
wells   in   question   were   made    (R.    3155).      T.    E. 
Barnes  was  the  Associated  Oil  Company's  superin- 
tendent of  drilling  in  the  Elk  Hills  (R.  3193,  3275). 
L.  J.  King  is  the  same  gentleman  who  testified  as  a 
witness  for  the  locators  under  whom  the  Associated 
Oil   Company  claimed  in  the  Yisalia  Land   Office 
contest.     In  that  proceeding,  in  which  it  appears 
from   the  minutes   of   the   executive   committee   of 
September  17,  1912  (R.  3646-7),  that  the  Associated 
Oil  Company  was  protesting  through  the  locators 
under  whom  it  claimed  the  right  of  certain  parties 
to  a  patent  to  a  portion  of  section  24  of  30-24  based 
upon   an   alleged   discovery   of   fuller 's-earth,    this 
same  Mr.  King  appeared  as  a  witness  and  testified 
strongly  to  the  mineral  character  of  the  Elk  Hills 
and  the  success  of  the  wells  drilled  on  24,  26  and  30 
(Ex.  9-C,  9-0),  as  did  also  T.  E.  Barnes  (Ex.  9-F). 
For  obvious  reasons  these  gentlemen  were  not  pro- 
duced as  witnesses  in  this  case,  although  they  prob- 


415 

ably  knew  more  about  the  three  deep  wells  under 
discussion  than  any  other  persons  in  the  world. 
Having  testified  in  a  contest  in  the  Land  Office 
where  the  success  of  the  Associated  Oil  Company 
depended  upon  proof  of  the  mineral  character  of 
the  lands  on  which  these  deep  wells  were  drilled  and 
having  borne  strong  witness  to  their  rich  mineral 
character  and  the  eminent  success  of  the  wells  drilled 
thereon,  they  were  disqualified  to  appear  as  witnesses 
in  this  case  in  which  it  is  appellants'  object  to  prove 
the  non-mineral  character  of  the  lands  and  the  non- 
success  of  the  wells.  However,  the  daily  reports  of 
their  drilling  operations,  while  not  offered  in  evi- 
dence by  appellants,  were  forced  into  evidence  by 
the  government  and  they  may  be  looked  to  as  faith- 
ful expositions  of  the  progress  and  success  of  the 
work  of  the  Associated  Oil  Company  in  developing 
these  lands  and  bringing  in  highly  productive  wells. 
These  daily  drilling  reports  begin  on  page  43  and 
extend  to  page  562  of  the  volume  of  "Documents  and 
Evidence  Not  Printed" — contemporaneous  records 
of  the  work  actually  done,  the  formations  actually 
passed  through  and  the  gas  and  oil  actually  pro- 
duced. 

A  thorough  anal^^sis  of  these  drilling  reports  which 
constitute  500  pages  of  the  typewritten  transcript  is 
manifestly  impossible  without  unduly  prolonging  the 
discussion  and  wearying  the  court  with  details.  The 
unfairness  and  inaccuracies  of  these  graphic  logs 
and  diagrammatic  charts  offered  by  appellants  sug- 
gest that  they  are  related  to  the  obvious  difficultv 


416 

on  the  part  of  the  trial  court  in  going  through  and 
analyzing  and  digesting  these  contemporaneous  rec- 
ords of  drilling  and  production.  For  the  purpose  of 
showing  the  utter  lack  of  reliability  of  these  graphic 
logs  and  charts  and  for  the  further  purpose  of  show- 
ing that  the  three  deep  wells  in  question  were  emi- 
nently successful  wells  and  demonstrate  the  mineral 
character  of  the  lands  surrounding  them,  the  govern- 
ment will  content  itself  with  asking  the  attention 
of  the  court  to  the  drilling  reports  setting  out  the 
work  on  and  production  of  the  deep  well  on  section 
24  for  the  months  of  June,  July  and  August,  1912, 
ending  with  the  twenty-third  day  of  August,  at 
which  time,  under  the  orders  of  the  executive  com- 
mittee of  the  Associated  Oil  Company  of  which  the 
chairman  was  Wm.  F.  Herrin,  general  counsel  of  the 
Southern  Pacific  Company,  all  of  the  Associated  Oil 
Company's  wells  in  the  Elk  Hills  were  shut  down. 
An  examination  of  the  specific  reports  in  question 
will  furnish  conclusive  answer  to  the  suggestion  that 
these  wells  were  shut  down  because  of  their  un- 
productive character  and  will  naturally  lead  the  in- 
quiring mind  to  the  question  whether  the  motive 
which  inspired  that  action  was  not  ulterior  and 
closely  connected  with  the  inquiry  in  this  suit  as  to 
the  mineral  character  of  the  lands  patented  to  the 
Southern  Pacific  Railroad  Company  under  patent 
No.  135  of  December  12,  1904,  here  assailed. 

The  following  reports  of  the  drillers  concerning 
the  well  on  section  24  of  30-23  is  taken  verhatim  from 
pages  555-6-7-8-9  and  560  of  the  volume  of  "Docu- 


417 

merits  and  Evidence  Not  Printed".  It  will  be  noted 
that  each  paragraph  begins  with  a  date  and  is  fol- 
lowed by  a  second  in  parenthesis,  the  explanation 
being,  taking  for  example  the  first  excerpt,  that  the 
report  was  dated  June  3,  the  first  date  mentioned, 
and  covered  the  operations  of  June  1,  the  parenthetic 
date. 

June  3  (1),  1912,  piunped  40  barrels  oil,  20  barrels 
M.  &  B.  S.  mostly  shale,  about  12%  water. 

June  3  (2),  1912,  pumped  2500  feet,  45  barels  oil, 
25  barrels  bluish  shale  or  rotary  mud,  10  barrels 
water. 

June  4  (3),  1912,  pumped  50  barrels  oil,  mud  and 
water. 

June  5  (4),  1912,  pumped  90  barrels  oil,  10  barrels 
M.  &  B.  S.  in  9  hours.  Still  pumping  and  shows 
great  improvement. 

June  6  (5),  1912,  pumped  190  barrels  oil  and  10 
barrels  M.  &  B.  S.  last  24  hours.  Well  greatly 
improving,  showing  quantities  of  gas  and  would 
not  be  surprised  if  it  started  flowing. 

June  7  (6),  1912,  pumped  105  barrels  net  last  24 
hours,  only  slight  trace  of  water. 

June  8  (7),  1912,  pmnped  105  barrels,  shows  some 
water. 

June  10  (9),  1912,  pimiped  175  barrels  pure  oil, 
showing  quantityof  gas. 

June  10  (8),  1912,  pumped  115  barrels  practically  all 
oil  and  pure.    Gravity  21.8  cut  .9  water  .2  B.  S. 

Jmie  11  (10),  1912,  pumped  120  barrels.  Showing 
large  quantity  of  gas.    (R.  555). 

June  12  (11),  1912,  pulled  to  put  on  tight  gas  head. 

June  13  (12),  1912,  well  flowed  almost  continuously 
while  pulling  tubing  to  put  tight  head  on  be- 
tween 8-inch  and  6-inch  casing.     This  morning 


418 

started  flowing  between  casings.  At  present 
time  is  making  800  to  900  barrels.  This  may  not 
keep  up  at  this  rate. 

June  14  (13),  1912,  stopped  flowing,  put  tight  casing 
head  between  6-inch  and  8-inch  after  this  was 
done,  well  flowed  once  through  6-inch  casing. 
Now  placing  well  on  pump.  Gravity  19.7  cut 
3%  water,  13%  B.  S. 

June  15  (14),  1912,  flowed  250  barrels  through  614- 
inch  casing,  reduced  to  2-inch  outlet.  Will  place 
tubing  in  well  to-day. 

June  17  (15),  1912,  flowed  300  barrels  through  6-inch 
casing. 

June  17  (16),  1912,  flowing  through  6-inch  casing 
spasmodically,  put  out  great  quantity  of  sand. 
Also  making  good  clean  oil,  produced  at  lowest 
figure  750  barrels  oil  yesterday.  Without  doubt 
will  increase  in  flow. 

June  18  (17),  1912,  flowed  steadily  last  24  hours, 
made  325  barrels. 

June  19  (18),  1912,  flowed  steadily  225  barrels,  run- 
ning bailer  to  agitate  and  make  flow.    Stronger. 

June  20  (19),  1912,  flowed  200  barrels,  hole  bridged 
over  at  2940  feet,  impossible  to  clean  out  with 
sand  pump,  putting  up  tools  to  break  bridge. 

June  21  (20),  1912,  flowed  200  barrels,  placing  bull 
wheels  in  derrick  and  stringing  up  tools  to  break 
bridge  at  2940  feet. 

June  22  (21),  1912,  flowed  175  barrels,  completed 
rigging  up  tools  and  ready  to  break  bridge. 

June  24  (22),  1912,  splicing  cable,  flowed  150  barrels. 
(R.  556). 

June  24  (23),  1912,  well  flowed  150  barrels.  Finished 
splicing  cable  and  ready  now  to  clean  out  bridge. 

June  25  (24),  1912,  cleaning  out  at  2940;  well  flowed 
175  barrels.  Sand  comes  in  about  as  fast  as 
taken  out. 


419 

June  26  (25),  1912,  cleaning  out  at  2940 ;  well  flowing 
continually  about  150  barrels.  So  far  sand 
comes  in  as  fast  as  taken  out. 

June  27  (26),  1912,  cleaned  out  to  2950  feet;  well 
flows  continually ;  made  125  barrels. 

June  28  (27),  1912,  cleaned  out  to  2990  feet;  gas 
blows  sand  out  of  bole  as  fast  as  tools  mix  it  up 
in  bottom.    Well  flowed  100  barrels. 

June  29  (28),  1912,  cleaned  out  to  2990  feet;  comes 
in  as  fast  as  taken  out ;  made  100  barrels. 

July  1   (29),  1912,  cleaning  out  and  preparing  to 
"  wash  out  bridge  with  oil  in  tubing. 

July  1  (30),  1912,  connecting  up  pump  to  wash 
bridge  out  by  use  of  tubing  and  oil. 

July   1    (30),   1912,   connecting  up   pump   to   wash 
*  bridge  out  by  use  of  tubing  and  oil. 

July  2   (1),  1912,  running  in  tubing  to  wash  out 

bridge. 
July  3   (2),  1912,  just  got  tubing  to  sand  bridge. 

Start  washing  today. 

July  5  (3),  1912,  washed  hole  to  2700  feet  with  tub- 
ing and  oil. 

July  5  (4),  1912,  cleaned  out  to  2970  feet  with  tub- 
ing and  oil.  Hole  filled  with  oil  and  exceeding 
gas  pressure. 

July  6  (5),  1912,  washed  down  to  3220  feet;  shows 
no  signs  of  gas  at  present  time. 

July  7  (6),  1912,  washed  to  3250  feet;  plugged  tub- 
ing in  bottom  and  pulling  out.    (R.  557). 

July  8  (7),  1912,  pulled  out  tubing  and  placing  same 
"back  to  continue  washing  at  3250  feet. 

July  9  (8),  1912,  cleaned  out  to  3275  feet. 

July  10  (9),  1912,  washed  do^\Ti  to  3500  feet. 

July  11   (10),  1912,  cleaned  out  to  3700  feet;  now 

pulling  out  to  place  on  pump. 
July  12  (11),  1912,  placing  well  on  pump. 


420 

July  13  (12),  1912,  placed  on  pump  at  2500  feet; 
flowing  about  350  barrels  per  day  through  tub- 
ing. As  yet  has  not  flowed  all  oil  out  that  was 
put  in  to  wash  hole  out. 

July  15  (13),  1912,  stopped  flowing;  washing  out 
tubing. 

July  15  (14),  1912,  pulling  well.  Started  flowing 
through  6-inch  casing.  Made  about  360  barrels. 
Pulling  again  this  morning. 

July  16  (15),  1912,  pulled  pump.  Same  was  sanded 
up.  Ean  in  with  bailer,  found  sand  at  2500 
feet.  Well  flowing  75  barrels;  no  fluid  above 
sand. 

July  17  (16),  1912,  flowing  75  barrels. 

July  18  (17),  1912,  flowing  75  barrels. 

July  19  (18),  1912,  flowing  75  barrels;  hole  filled  up 
to  2500  feet ;  in  same  condition  as  before  washed 
out. 

July  20  (19),  1912,  flowed  100  barrels. 

July  22  (20),  1912,  flowed  75  barrels  good  oil;  filled 
up  with  sand  to  2550  feet. 

July  22  (21),  1912,  filled  up  with  oil  to  clean  out. 

July  23  (22),  1912,  flowed  75  barrels,  agitating  with 
bailer. 

July  24  (23),  1912,  filled  up  with  oil  and  cleaning  out 
at  2600  feet.     (R.  558). 

July  25  (24),  1912,  repairing  clamps  between  cas- 
ings. 

July  26  (25),  1912,  making  clamps  to  pack  off  be- 
tween 6-incli  and  8i/4-inch  casing. 

July  27  (26),  1912,  filled  with  oil  from  sump,  cleaned 
out  to  2600  feet;  preparing  to  put  on  new  set 
packing  clamps. 

July  29  (27),  1912,  cleaning  out;  holding  gas  down 
with  oil. 


421 

July  29  (28),  1912,  placed  new  clamps  between  cas- 
ings; cleaned  out  to  2560  feet. 

July  30  (29),  1912,  sand  heaved;  now  cleaning  out  at 
2390  feet. 

July  31  (30),  1912,  cleaned  out  to  2470  feet. 

Aug.  1  (31),  1912,  cleaned  out  to  2525  feet. 

Aug.  2  (1),  1912,  cleaned  out  to  2555  feet. 

Aug.  3  (2),  1912,  cleaned  out  to  2600  feet;  well  blew 
out ;  making  considerable  quantity  of  sand,  only 
small  quantity  of  oil. 

Aug.  4  (3),  1912,  cleaned  out  to  2560  feet;  flowing  at 
rate  of  50  barrels. 

Aug.  5  (4),  1912,  cleaning  out  to  2560  feet;  shows 
bad  place  in  casing;  well  flowed  at  rate  of  100 
barrels. 

Aug.  6  (5),  1912,  cleaning  out  at  2560  feet;  flo^\ing 
100  barrels. 

Aug.  7  (6),  1912,  cleaning  out  2560  feet. 

Aug.  8  (7),  1912,  cleaning  out  2570  feet. 

Aug.  9  (8),  1912,  jumped  pin  on  bit  of  small  tools, 
fishing. 

Aug.  10  (9),  1912,  fishing  for  bit. 

Aug.  12  (10),  1912,  fishing  for  lost  drilling  bit;  well 
flowing  trifle  over  100  barrels  per  day,  actual 
measurement  in  tank. 

Aug.  12  (11),  fishing  for  drill  bit;  well  flowing  100 
barrels  per  24-hour  day;  also  flowing  regularly 
with  oil  a  quantity  of  3,200,000  cubic  feet  gas 
equal  to  4  inches  mercury  in  6-inch  outlet. 
(R.  559). 

Aug.  13  (12),  1912,  flowing  100  barrels  oil;  3,000,000 

cubic  feet  gas;  fishing  for  drill  bit. 
Aug.  14  (13),  1912,  flowing  100  barrels  oil;  3,000,000 

cubic  feet  gas ;  fishing  for  drill  bit. 
Aug.  15  (14),  1912,  flowing  100  barrels  oil;  3,000,000 

cubic  feet  gas;  fishing  for  bit. 


422 

Aug.  16  (15),  1912,  flowing  same  prior  report;  mak- 
ing special  fishing  tool  to  fish  for  lost  bit. 

Aug.  17  (16),  1912,  flowing  same  as  yesterday;  will 
fish  for  bit  today. 

Aug.  19  (17),  1912,  flowing  same,  fishing  for  bit. 

Aug.  19  (18),  1912,  flowing  and  trying  to  get  hole 
cleaned  out  down  to  bit ;  sand  running  in  badly. 

Aug.  20  (19),  1912,  unable  to  recover  drill  bit;  will 
therefore  cap  well  as  directed. 

Aug.  22    (21),   1912,  closing  well  in  tight  to  shut 

down. 
Aug.  23  (22),  1912,  capping  and  will  be  closed  down 

today. 
Aug.  24  (23),  1912,  Elk  Hills.    All  wells  shut  down. 

(R.  560). 

It  appears  from  the  foregoing  records,  so  strictly 
contemporaneous  with  the  actual  operations  as  to 
be  almost  a  part  of  the  res  gestae,  that  during  the 
month  of  June,  1912,  the  well  on  section  24,  although 
shut  down  because  of  work  being  done  on  it  during 
five  of  the  days,  produced  4410  barrels  of  oil  or  an 
average  of  190  barrels  per  day;  and  this  despite  the 
fact  that  on  June  19  the  well  bridged  over  at  2940 
feet  and  continued  bridged  over  throughout  the 
remainder  of  the  month  in  the  face  of  strenuous 
effort  to  break  through  tlie  bridge.  In  other  words, 
the  production  was  all  from  a  point  above  the  2940 
foot  level  and  it  is  noted  that  on  June  24  and  there- 
after sand  was  coming  in  as  fast  as  taken  out. 
Surely,  in  the  face  of  such  conditions  as  these  the 
record  of  this  well  for  the  month  of  June,  1912,  was 
phenomenal  and  such  as  to  demonstrate  its  high 
commercial  character. 


423 

The  production  attributed  to  this  well  by  auditor 
Williams  of  the  Associated  Oil  Company  on  page 
3126  of  the  record  is  2965  barrels,  figures  which  can- 
not be  reconciled  with  the  figures  contained  in  the 
daily  drilling  reports.  Appellants  sought  to  do  so 
upon  the  ground  that  the  drilling  reports  were  mere 
estimates ;  but  it  is  hardly  to  be  conceived  that  such 
an  expert  as  L.  J.  King,  superintendent  of  the  Asso- 
ciated Oil  Company,  who  had  had  25  or  more  years 
experience  in  such  matter,  could  have  been  as 
radically  wrong  as  appellants  would  have  the  court 
believe.  Furthermore,  the  Associated  Oil  Com- 
pany's so-called  monthly  record  of  production  was 
admittedly  based,  not  on  production,  but  on  the 
amount  of  oil  sold,  for  the  witness  White,  speaking 
of  this  matter,  says  on  page  3232  of  the  record  that 
the  totals  which  he  showed — which  were  identical 
with  those  shown  by  Auditor  Williams — was  the 
"amount  of  oil  sold". 

The  court  is  not  concerned  with  the  amount  of 
oil  sold  by  the  Associated  Oil  Company  from  the 
well  on  section  24,  but  with  the  amount  of  oil  which 
that  well  produced,  a  fact  shown  only  on  the  drilling 
reports  under  review.  It  does  not  lie  in  the  mouth 
of  appellants  to  throw  doubt  upon  their  own  con- 
temporaneous records. 

This  incident  concerning  the  well  on  24  illustrates 
all  of  these  production  charts  introduced  by  appel- 
lants in  lieu  of  the  original  drilling  reports.  Auditor 
Williams  furnished  a  report  of  the  production  of 


424 

each  of  tlie  three  deep  wells  and  they  are  found 
on  pages  3125  and  3126  of  the  record.  Their  pur- 
pose was  undoubtedly  to  show  that  these  wells  were 
failures.  If  the  well  on  24,  as  indicated  on  page 
3126,  was  doing  its  best — was  allowed  to  do  its 
best — and  was  producing  the  entire  time  and  yielded 
only  240  barrels  in  May,  2965  in  June,  247  in  July 
and  150  in  August,  these  facts,  unexplained  would 
go  far  towards  establishing  appellants'  thesis  that 
this  well  was  a  failure;  and  appellants  were  abso- 
lutely silent  and  failed  even  to  hint  that  during 
May  thev  were  continuously  at  work  on  the  well 
and  that  during  the  first  ten  days  of  the  month  they 
were  not  pimiping  from  the  true  bottom  of  the  well, 
but  only  at  a  depth  of  2500  feet  and  during  the  re- 
mainder of  the  month,  that  is,  until  the  28th  or  29th, 
they  were  constantly  at  work  on  it  perforating  the 
casing  and,  in  fact,  finishing  the  well  preparatory  to 
production.  This  will  more  fully  appear  upon  read- 
ing the  drilling  reports  for  May  on  pages  553,  554 
and  555  of  the  volume  of  ''Documents  and  Evidence 
Not  Printed".  That  the  work  then  done  was  needed 
and  resulted  in  success  is  shown  by  the  performance 
of  the  well  during  June,  as  already  set  out.  As  a 
matter  of  fact,  the  well  was  not  ready  for  the  pump 
until  June  and  what  it  did  in  May  is  of  no  more 
importance  than  what  it  or  any  other  well  does  be- 
fore completion.  The  fact  of  non-production  before 
completion  shows  nothing  as  to  production  after 
completion. 


425 

The  production,  despite  unfavorable  conditions 
and  five  days  of  idleness  during  June,  has  already 
been  shown  to  have  been  4410  barrels. 

Now,  for  July :  On  the  first,  second,  third,  fourth, 
fifth,  sixth,  seventh,  eighth,  ninth,  tenth  and  eleventh 
the  well  was  shut  down  while  the  drillers  were  at 
work  on  it,  as  appears  on  pages  557  and  558  of  the 
volume  of  "Documents  and  Evidence  Not  Printed". 
On  the  twelfth  it  was  for  the  first  time  during  the 
mouth  placed  on  the  pump  at  2500  feet  the  while  it 
was  flowing  350  barrels  a  day  through  the  tubing. 
On  the  thirteenth  it  stopped  flowing  and  was  not 
pumped.  On  the  fourteenth,  while  at  work  on  it,  it 
flowed  350  barrels.  On  the  fifteenth  the  pump  was 
pulled  and  found  sanded  up  and  the  hole  was  filled 
with  sand  to  the  2500  foot  level,  notwithstanding 
which  condition  the  well  flowed  75  barrels.  On  the. 
sixteenth,  seventeenth  and  eighteenth,  although  filled 
with  sand  up  to  the  2500  foot  level,  the  well  flowed 
75  barrels  a  dav.  On  the  nineteenth  and  twentieth, 
notwithstanding  the  fact  that  it  was  still  filled  with 
sand  to  the  2500  foot  level,  it  flowed  respectively 
100  and  75  barrels.  On  the  twenty-first  it  was  in 
process  of  cleaning  and  preparation  and  this  con- 
tinued on  the  twentj^-third,  twenty-fourth,  twenty- 
fifth,  twenty-sixth,  twenty-seventh,  twenty-eighth, 
twentv-ninth  and  thirtieth.  Even  a  casual  exami- 
nation  of  pages  557,  558  and  559  will  show  that  the 
well  was  in  trouble  during  the  entire  month  of  July. 
Consequently,  what  it  produced  was  in  spite  of 
trouble   and   effort   to   restrain   production   during 


426 

work.  Then,  too,  the  actual  production  shown  by 
the  charts  is  considerably  less  than  that  shown  by 
the  drilling  reports. 

For  August  the  drilling  reports  show  the  follow- 
ing history:  During  the  first  seven  days  "cleaning 
out"  was  in  process,  notwithstanding  which  the  well 
on  the  third  was  flowing  at  the  rate  of  50  barrels,  on 
the  fourth  at  the  rate  of  100  barrels  and  on  the 
fifth  it  actually  flowed  100  barrels.  On  the  eighth 
the  drilling-bit  was  lost  in  the  hole  and  throughout 
the  time  from  then  until  the  well  was  shut  down  on 
the  twenty-fourth  they  were  trying  to  recover  it, 
notwithstanding  wliich  the  well  on  the  tenth  flowed 
a  "trifle  over  100  barrels  per  day  actual  measure- 
ment in  tank";  on  the  eleventh,  while  still  fishing 
for  the  drill-bit,  it  again  flowed  100  barrels  a  day 
and  three  million,  two  hundred  thousand  cubic  feet 
of  gas.  On  the  twelfth,  thirteenth,  fourteenth,  fif- 
teenth and  sixteenth  the  performance  of  the  eleventh 
was  duplicated.  On  the  seventeenth  it  flowed — on 
the  eighteenth  it  was  flowing  and  the  sand  had  come 
in  from  the  bottom  so  that  it  covered  the  drill-bit 
for  which  they  were  still  fishing.  On  the  nineteenth 
it  was  flowing  while  they  fished.  On  the  twentieth, 
unable  to  recover  the  drill-bit,  they  proceeded  to 
cap  the  well  "as  directed"  and  were  engaged  in 
closing  it  until  the  twenty-second,  on  which  day  the 
report  is,  "capping  and  will  be  closed  down  to-day". 
See  pages  559  and  560  of  the  volume  of  "Documents 
and  Evidence  Not  Printed". 


427 

Now,  Auditor  Williams'  and  clerk  White's  charts 
imexplaiiied  show  a  production  for  August  of  150 
barrels  and  tliev  undoubtedly  intended  that  this 
should  be  taken  to  mean  that  the  best  the  w^ell  could 
do  during  that  month  was  that  amount  of  oil.  The 
drilling  reports  just  referred  to  show  that  during 
the  entire  month  the  well  was  off  the  pump  and 
filled  with  sand  up  to  the  2500  foot  level;  and  that 
on  the  eighth  the  drillers  lost  in  the  hole  the  drilling- 
bit  and  spent  the  remainder  of  the  time  before  clos- 
ing down  in  unsuccessfully  fishing  for  it.  Now, 
this  drilling-bit  weighed,  according  to  apjDellants' 
witness  White,  author  of  the  graphic  production 
charts,  two  hundred  or  two  hundred  and  fifty  pounds 
and  was  six  inches  in  diameter,  the  casincr  in 
which  it  was  lost  being  six  and  one-quarter  inches 
(R.  3278).  Here  is  what  the  Associated  Oil  Com- 
pany's drilling  reports  show:  a  well  four  thousand 
feet  deep,  but  filled  with  fifteen  hundred  feet  of  sand 
that  comes  in  faster  than  it  is  cleaned  out  and  that 
has  stuck  in  it  at  the  depth  of  2500  feet  a  two  hun- 
dred and  fifty  pound  steel  bit  that  lacks  only  a  quar- 
ter of  an  inch  of  being  as  large  in  diameter  as  the 
casing  in  which  it  is  lodged.  On  this  well  drillers 
are  constantly  at  work  in  efforts  to  clean  out  the  in- 
coming sand  and  find  and  extricate  the  lost  bit.  If, 
under  these  circumstances,  the  well  produced  not  a 
barrel  of  oil,  it  would  be  neither  matter  of  surprise 
nor  show  it  unproductive;  but,  on  the  remarkable 
other  hand,  despite  these  unfavorable,  nay,  seeming- 
ly prohibitive  conditions,  the  evidence  of  the  Associ- 
ated Oil  Company,  subsidiary  of  the  Southern  Pa- 


428 

cific  Company,  shows  that  its  well  on  24  was  flowing 
one  hundred  or  more  barrels  a  day!  If  that  does 
not  speak  convincingly  of  huge  productive  capacity, 
surely  there  is  need  of  the  invention  of  a  language 
better  suited  to  express  productivity.  It  is  no  w^on- 
der  that  on  June  16,  when  it  produced  "at  lowest 
figures  750  barrels  oil",  Superintendent  King  joy- 
fully predicted:  "without  doubt  will  increase  in 
flow"  (Volume  of  "Documents  and  Evidence  Not 
Printed",  page  556) — a  prediction  which  undoubted- 
ly would  have  been  fulfilled  but  for  the  influx  of  sand 
and  the  lodgment  of  the  drilling-bit.  A  well  that 
flows  one  hundred  barrels  of  oil  under  such  adverse 
conditions  is  surely  no  mean  well.  It  might  easily 
under  favorable  conditions  flow  one  thousand  bar- 
rels a  day.  If  appellants  rely  upon  the  unskillful 
work  of  the  drillers  of  the  Associated  Oil  Company 
to  prove  non-mineral  character  of  the  lands  in  suit, 
they  would  be  nearer  success  than  in  urging  that  the 
well  on  24  constitutes  such  proof.  The  one  conten- 
tion w^ould  be  as  sound  as  the  other.  Both  would, 
it  is  with  great  respect  submitted,  be  absurd! 

The  inaccuracies  and  misrepresentations  concern- 
ing the  well  on  24  are  duplicated  in  the  graphic  logs 
or  production  charts  with  reference  to  the  wells  on 
26  and  30.  The  former  came  is  as  a  gusher  produc- 
ing five  thousand  barrels  a  day  of  a  very  light,  vola- 
tile oil,  39°  Baume,  and  the  latter  produced,  accord- 
ing to  the  estimate  of  Mr.  Maxwell,  of  the  Associated 
Oil  Company,  made  in  the  presence  of  L.  J.  King, 
superintendent,  and  J.  W.  Kingsbury,  a  mineral  in- 


429 

spector  of  the  General  Land  Office,  at  the  rate  of 
five  thousand  barrels  a  dav.  Of  course,  this  was  in- 
itial  production.  Later,  when  the  well  had  "blown 
its  head  off",  Kingsbury  on  Januarj^  24:,  1912,  with 
Mr.  McCabe,  head  driller  of  the  Associated  Oil  Com- 
pany, gauged  it  and  found  it  "producing  385  barrels 
per  twenty-four  hours  and  the  gravity  of  the  oil  was 
24.2°  Baume."     (E.  3688-9;  also  3733). 

Both  the  drilling  reports  and  appellants'  dia- 
grammatic log  show  159  feet  of  oil  sand  in  the  well 
on  26.  That  they  so  show  and  that  the  thickness 
represented  is  far  greater  than  the  average  in  the 
oil  fields  of  California  and  greater  than  any  of  the 
wells  in  the  Midway  save  one  or  two  are  facts  ad- 
mitted by  even  so  hostile  a  witness  as  F.  M.  Ander- 
son (R.  2629,  2635). 

But  these  logs  omit  to  show  that  boulders  were  re- 
ported by  the  drillers  in  the  three  wells.  An  expla- 
nation of  this  omission  was  asked  of  White,  the  au- 
thor of  the  logs,  as  will  appear  from  reading  pages 
3349  et  seq.  of  the  record.  His  reply  amounts  to 
this:  that,  when  drillers  find  boulders,  they  so  re- 
port ;  but  that,  since  they  sometimes  call  other  things 
boulders,  he  did  not  in  his  logs  represent  the  bould- 
ers, because  he  assumed  that  the  drillers  meant  other 
than  they  said.  AVhite  admitted  that  his  logs  failed 
to  show  "to  some  extent"  the  formations  as  re- 
ported exactly  by  the  drillers  (R.  3356),  also  stating 
that  he  did  not  take  occasion  to  interview  any  of  the 
drillers  to  ascertain,  when  they  reported  "boulders", 


430 

whether  they  meant  what  they  said  or  something  else 
(R.  3356).     This  is  more  important  than  it  seems 
and  justifies  the  following  reference  to  the  matter. 
After  much  insistence  White  was  induced  to  "ex- 
plain the  reason  for  making  up  the  report",  refer- 
ring to  his  logs  and  charts,  Exhibits  172,  173,  174, 
175,  176  and  177.    Having  first  said  that  at  the  time 
he  made  up  "that  schedule"  he  did  not  know  that  it 
was  to  be  brought  into  court  nor  for  what  purpose 
it  would  be  used  and  that  he  made  it  up  of  his  own 
accord  because  he  thought  "it  was  more  desirable 
than  to  introduce  all  our  telegrams  and  all  our  of- 
fice  records   in  any  court  proceedings  that  might 
take  place,"  (E.  3423-4),  he  finally  stated  that  he 
would  explain  the  reason  for  making  up  the  report. 
He  said  that  Mr.  E.  G.  Jeffress,  a  representative  of 
counsel  for  appellants,  called  at  the  office  and  wanted 
some  data;  that  he.  White,  thought  it  would  be  ad- 
visable  to   give   Jeffress   a   summary   of   the   office 
records;  that  he  knew  from  other  sources  that  the 
data  were  to  be  used  in  this  case  and  "for  the  pur- 
pose of  supporting  the  contention  that  certain  lands 
adjoining  the  lands  affected  by  the  summary  were 
not  mineral  in  character;  and  that  with  these  facts  in 
mind  he  constructed  the  three  charts  known  as  de- 
fendants exhibits  172, 173  and  174. "    (R.  3225).    He 
further  stated,  with  reference  to  exhibits  175,  176 
and  177,  tliat  they  were  prepared  under  the  super- 
vision of  W.  A.   Williams,   chief  geologist  of  the 
Associated  Oil  Company,  and  he.  White,  understood 
that  they  were  foi-  use  in  any  litigation  which  the 
company   might    have    affecting   these    lands,    par- 


431 

ticularly  this  litigatiou  (R.  3324).  He  further  ad- 
mitted that  Williams  in  effect  prepared  the  logs  (R. 
3325).    Finally  he  was  asked  this  question: 

"I  understand  the  log  was  practically  made 
up  by  Mr.  Williams  or  in  his  office  and  then  was 
checked  and  the  tracing  made  and  this  blue- 
print made  from  that.    Is  that  correct? 

"That  is  about  the  proceeding,  as  I  remem- 
ber." 

It  is  interesting  in  this  connection  to  consider 
what  is  disclosed  by  the  record  concerning  Mr.  W.  A. 
Williams,  chief  geologist  of  the  Associated  Oil  Com- 
pany. He  was  one  of  the  principal  witnesses  in  the 
Visalia  contest  in  which  the  Associated  Oil  Company, 
backing  the  locators  under  whom  it  claimed,  set  up 
the  oil  character  of  the  lands  in  the  Elk  Hills  on 
which  these  deep  wells  had  been  drilled.  It  will  be 
recalled  that  certain  persons  had  filed  application  for 
mineral  patent  to  some  of  these  lands  on  the  ground 
that  they  had  made  valid  discoveries  thereon  of 
fuller 's-earth.  The  locators  under  whom  the  Asso- 
ciated Oil  Company  claimed  contested  the  applica- 
tion and  introduced  evidence  on  the  hearing  before 
the  Register  and  Receiver  at  Visalia  to  prove  that 
the  lands  were  not  valuable  for  fuller  's-earth,  but  for 
oil.  He  testified  that  he  advised  the  Associated  Oil 
Company  to  prospect  this  land  and  otherwise  bore 
witness  to  its  oil  character,  testifying  that  the  wells 
drilled  thereon  by  the  Associated  Oil  Company  dem- 
onstrated the  oil  character  of  the  land  (Ex.  9-E). 
The  following  situation  is  therefore  presented:  Mr. 


432 

Williams,  the  chief  'geologist  of  the  Associated  Oil 
Company,  as  a  witness  for  his  employer  in  a  Land 
Office  proceeding  testified  strongly  to  the  mineral 
character  of  the  lands  under  discussion.  Later,  for 
use  in  a  proceeding  in  the  Federal  courts,  he  pre- 
pared diagrammatic  logs  and  charts  for  the  purpose 
of  i3roYing  the  ojDposite,  that  is,  the  non-mineral 
character  of  the  same  lands.  Admittedly,  these 
charts  omit  to  show  much  of  importance  and  signi- 
cance  that  appears  in  the  original  drilling  reports 
upon  which  they  are  supposed  to  be  founded  and 
from  which  witnesses  for  appellants  say  thej^  were 
made. 

Reverting  to  the  matter  of  boulders,  it  will  be  re- 
called that  appellants'  expert  witness,  F.  M.  Ander- 
son, testified  that  the  Elk  Hills  were  too  far  removed 
from  any  ancient  shore-line  to  contain  sands  capable 
of  furnishing  a  reservoir  for  oil  in  considerable 
quantity.  When  asked  why  the  same  argument 
would  not  condemn  the  Buena  Vista  Hills,  in  whose 
oil  character  he  believed  and  to  which  he  bore  wit- 
ness, he  explained  by  saying  that  the  Buena  Vista 
Hills  themselves  contain  a  shore-line.  Further  asked 
if  the  same  might  not  be  true  of  the  Elk  Hills,  he 
answered  in  the  negative.  He  was  also  asked  what 
are  the  jjresent  evidences  of  shore-line  conditions, 
and,  in  reply,  indicated  the  presence  of  ''boulders". 
If  appellants'  diagrammatic  logs  and  charts  had 
shown  the  presence  of  boulders,  all  of  the  props 
would  have  been  knocked  from  under  Mr.  Ander- 
son's argument,  since  the  boulders  would  prove  the 


433 

presence  of  a  shore-line  in  the  Elk  Hills  and  thus 
refute  Mr.  Anderson's  contentions.  It  is  hardly 
mere  accident  that  the  diagrannnatic  charts  and  logs 
omit  to  show  the  boulders  which  the  drilling  reports 
show  and  their  omission  cannot  be  explained  by  the 
frivolous  argument  of  Mr.  White  that  he  did  not  in- 
sert the  boulders  because  drillers  sometimes  report 
boulders  when  they  mean  something  else.  The  ir- 
resistible conclusion  from  all  of  the  foregoing  is  that 
the  dereliction  at  this  point  is  attributable  to  some 
one  whose  training  and  experience  and  ready  mind 
realized  what  would  have  been  imported  by  the  offer 
of  evidence  on  the  part  of  appellants  of  the  existence 
in  the  Elk  Hills  of  the  very  thing  whose  presence 
would  absolutely  refute  the  argument  of  appellants' 
leading  expert  against  the  oil  character  of  the  lands 
in  suit.  Counsel  for  appellants  at  the  time  of  intro- 
ducing the  graphic  logs  and  diagrammatic  charts, 
exhibits  172,  173,  174,  175,  176  and  177,  declared 
that  it  was  not  his  purpose  to  introduce  in  evidence 
the  original  drilling  reports  from  which  it  was 
clained  that  these  exhibits  were  made  (E.  3157)  ; 
and  these  daily  drilling  reports,  as  already  indicated, 
were  forced  into  evidence  over  the  protest  of  counsel 
for  appellants,  the  latter  contending  that  they  were 
private  documents  belonging  to  the  Associated  Oil 
Company  and  that  he  was  not  at  liberty  even  to  leave 
them  with  the  Special  Examiner  (R.  3159-60). 

It  is  not  the  intention  of  the  government  to  ques- 
tion the  good  faith  or  integrity  of  counsel  for  ap- 
pellants in  the  trial  court.    Counsel  for  the  govern- 


434 

ment  conceive  it  to  be  their  duty  to  invite  the  atten- 
tion of  the  court  to  the  manifest  inaccuracies  and 
misrepresentations  in  the  diagrammatic  logs  and 
charts  in  question  and  to  the  omission  therefrom  of 
many  facts  and  circumstances  reported  by  the  drill- 
ers and  contained  in  their  daily  drilling  reports. 
That  these  inaccuracies,  misrepresentations  and 
omissions  are  proved  by  a  comparison  of  the  dia- 
grammatic logs  and  charts  with  the  original  daily 
drilling  reports  is  beyond  question;  and  that  the 
original  daily  drilling  reports  demonstrate  the  truth 
of  the  situation,  namely,  the  rich  mineral  character 
of  the  lands  in  suit  and  the  commercial  character 
of  the  three  deep  wells  under  discussion,  is  likewise 
bej^ond  question. 

UNSUCCESSFUL  WELLS  DRILLED  IN  THE  ELK  HILLS 

SINCE  PATENT. 

Much  was  made  by  appellants  of  the  fact  that  a 
number  of  wells  were  drilled  in  the  Elk  Hills  in  1910 
and  1911  that  did  not  produce  oil  in  commercial 
quantities.  As  already  suggested,  a  few  unsuccessful 
wells  do  not  prove  the  non-mineral  character  of  the 
lands.  Dr.  Branner  testified  that,  while  he  could  not, 
when  he  first  examined  the  Elk  Hills,  have  given 
''an  assurance"  that  oil  in  valuable  quantities  could 
have  been  found,  he  could  do  so  at  the  time  of  testi- 
fying on  the  basis  of  wells  that  had  been  put  down 
there  and  found  oil.  He  further  stated  that  he  would 
not  hesitate  to  advise  operators  to  go  ahead  with 
prospecting  even  if  there  had  been  twenty-eight 
wells  drilled  and  indications  of  oil  had  been  found 


435 

in  only  two  of  them,  saying  that  it  depended  on  how 
the  wells  were  located.  If  put  down  without  refer- 
ence to  the  geologic  structure,  he  said  they  might  go 
to  an  enormous  depth  without  getting  oil,  while  they 
might  move  off  to  one  side  and  put  do^Ti  a  well  with- 
in a  thousand  or  two  thousand  feet  and  get  entirely 
different  results.  He  added:  "The  general  structure 
of  the  Elk  Hills  is  so  favorable  to  the  accumulation 
of  oil  in  that  region  that,  if  they  had  gone  to  five 
thousand  feet  and  not  found  oil,  I  should  still  advise 
a  company  to  not  give  up  hope  of  finding  it."  (R. 
1008).  This  evidence  was  elicited  on  cross-examina- 
tion and  is  here  cited  for  the  purpose  of  substanti- 
ating the  statement  that  a  few  unsuccessful  wells  do 
not  i)rove  the  non-mineral  character  of  a  large  area, 
especially  where  there  are  successful  wells — a  matter 
of  common  knowledge. 

The  government  admits  that  in  1910  and  1911  sev- 
eral wells  were  drilled  along  the  fringe  of  the  Elk 
Hills  which  were  apparently  unproductive  and  some 
of  which  were  temporarily  abandoned.  Their  fail- 
ure, however,  to  find  oil  in  commercial  quantities 
throws  no  light  whatever  upon  the  question  of  the 
mineral  character  of  the  lands  in  suit  which  is  abun- 
dantly otherwise  proved.  By  unduly  prolonging  the 
discussion  of  unessential  points  the  government 
could  show  from  the  testimony  of  numerous  and  un- 
impeachable witnesses  that  these  wells  were  unsuc- 
cessful either  because  badly  located  with  reference 
to  the  axis  of  the  anticline  or  because  drilled  to  an 
inadequate  depth.    As  a  matter  of  fact,  in  well  nigh 


436 

every  one  of  them  gas  and  oil  in  greater  or  less 
quantities  were  encountered.  Even  appellants'  lead- 
ing expert,  F.  M.  Anderson,  admitted  that  these 
unsuccessful  wells,  which  he  had  observed  on  the 
fringe  of  the  hills  and  which  were  not  in  operation 
when  he  visited  them,  were  removed  from  the  axis 
of  the  anticline  and  all  in  very  unfavorable  positions 
and  that  this  was  true  of  those  that  were  located  on 
the  anticline.     (R.  2640-1.) 

Much  was  said  by  appellants  of  the  David  Kinsey 
well  on  section  12  of  31-24.  Kinsey  himself  testified 
that  in  it  he  got  a  showing  of  oil  at  3700  feet  and 
struck  gas  from  3700  to  4500  feet  (R.  1795).  He 
admitted  that  this  well  is  on  the  eastern  end  of  the 
hills  (R.  1800)  and  it  elsewhere  appears  that  it  is 
situated  where  the  Elk  Hills  anticline  is  plunging 
rapidly  downward  and  that,  even  if  he  had  drilled  to 
a  depth  of  ten  thousand  feet,  he  might  not  have 
reached  the  oil-bearing  sands.  Section  12  of  31-24 
is  more  than  six  miles  distant  from  the  nearest  of 
the  lands  in  suit.  Appellants  have  much  to  say  of 
unsuccessful  wells  drilled  at  great  distances  from 
the  lands  in  suit,  but  are  silent  upon  the  large  num- 
ber of  successful  wells  drilled  nearer  to  the  lands 
in  suit  than  are  the  unsuccessful  wells  upon  which 
they  animadvert  so  freely.  Like  or  similar  con- 
ditions to  those  obtaining  in  the  case  of  the  Kinsey 
well  might,  if  space  permitted,  be  duplicated  in  the 
case  of  other  unsuccessful  wells;  but  the  fact  re- 
mains that  in  practically  every  one  of  them  there  was 


437 

at  one  depth  or  another  a  showing  of  oil,  proving 
the  dissemination  of  oil  through  the  strata. 

Four  unsuccessful  wells  are  joarticularly  referred 
to  on  page  53  of  appellants'  "Brief  Upon  the  Facts", 
which  hajDpens  to  be  served  on  counsel  for  the  gov- 
ernment at  almost  the  very  moment  at  which  the 
government's  brief  is  in  process  of  passing  to  the 
printer.  It  may  be  well,  therefore,  to  give  the  court 
the  benefit  of  certain  information  concerning  these 
four  unsuccessful  wells  not  imparted  in  the  brief  of 
appellants.  They  rely  upon  their  witness  John  Lang 
and  his  views  are  set  out  on  page  84  of  their  brief. 

With  reference  to  the  Redlands  Oil  Company's  well 
on  section  30  of  30-23  which  was  drilled  to  a  depth 
of  2850  feet,  Lang  testified  that  gas  was  found  at  520 
feet  and  at  1050  feet  a  color  of  oil  (R.  1954).  At 
1300  feet  the  derrick  was  burned  by  the  ignition  of 
gas  produced  from  the  well  (R.  1956).  Lang  testified 
that  the  depth  of  this  well  was  not  sufficient  to  test 
the  territory  and  that  there  is  a  possibility  of  oil  in 
commercial  quantit}'  at  greater  depth  (R.  1963). 
This  is  the  well  which  appellants'  witness,  W.  J. 
Luke,  Jr.,  designated  on  his  map  as  a  dry  hole  (R. 
2303)  ;  but  he  admitted  on  cross-examination  that  the 
log  showed  sixty  feet  of  sandy  shale  with  a  showing 
of  oil  at  a  depth  of  2720  to  2780  feet  (R.  2306). 

With  reference  to  the  Midwav  Pacific  well  on  32 
of  30-23,  which  was  drilled  to  a  depth  of  2425  feet, 
Mr.  Lang  says  that  it  was  not  thoroughly  tested  and 


438 

that,  if  drilled  deeper,  would  more  thoroughly  test 
the  territory  (R.  1963)  and  that  they  quit  too  soon 
to  thoroughly  test  it  (R.  1964-5).  In  this  well  the 
drillers  found  eighty  feet  of  brown  shale  between  the 
1510-foot  level  and  the  1590-foot  level  and  the  log  of 
this  well  bore  the  notation  "trace  of  oil  and  gas  at 
1536  feet".     (R.  2314). 

The  Hillcrest  Oil  Company's  well  on  section  28  of 
30-23,  1670  feet  deep,  was,  according  to  Lang,  of  in- 
sufficient depth  (R.  1963).  This  is  not  an  aban- 
doned well  nor  is  the  territory  abandoned,  since  the 
company  still  keeps  a  watchman  there  and  still  enter- 
tains the  hope  by  drilling  deeper  of  making  a  good 
well,  the  present  obstacle  in  their  way  being  a  lack 
of  funds.  This  is  upon  the  authority  of  Mr.  Lang 
(R.  1960).  This  is  further  stated  by  the  Associated 
Oil  Company's  geologist  W.  A.  Williams  in  the  Vi- 
salia  contest.  The  log  of  this  well  shows  one  hun- 
dred and  sevent3^-eight  feet  of  gas  sand  (R.  2311-12). 

The  Scottish  Oil  Fields'  well  on  section  20  of  30-23 
was  not  located  upon  the  advice  of  a  geologist,  ac- 
cording to  appellants'  witness,  T.  M.  Storke,  who  was 
one  of  the  organizers  of  that  company  (R.  2045). 
This  well  found  (^^nsiderable  gas  at  2600  feet  and 
thereafter  (R.  2044).  The  well  was  started  in  No- 
vember, 1910,  and  Storke  testified  that,  since  that  was 
subsequent  to  the  withdrawal  orders  of  1909  and 
1910,  if  they. had  discovered  commercial  and  paying 
quantities  of  oil  before  they  pulled  their  tools  from 
the  well,  they  were  uncertain  as  to  the  validity  of  any 


439 

title  they  might  acquire  from  the  government  (R. 
2045).  Upon  this  point  appellants'  witness  Lang 
also  testified,  saying  that  the  fact  that  the  govern- 
ment had  withdrawn  the  land  in  the  Elk  Hills  had 
something  to  do  with  their  failure  to  go  further 
with  their  locations,  since  it  made,  it  doubtful 
whether  or  not  they  could  get  title  to  the  land.  He 
said  further:  ^'The  withdrawal,  I  think,  has  also  had 
a  tendency  to  discourage  capital  and  has  discouraged 
locators  because  of  their  inability  to  get  capital  in- 
terested." Moreover,  the  log  of  this  well  (Exhibit 
No.  11)  shows  seventeen  feet  of  shale  showing  gas 
and  oil  (R.  1955).  Lang  also  testified  of  his  own 
knowledge  that  oil  had  been  discovered  on  sections 
26  and  30  and  gas  on  sections  32,  30,  20,  28  and  26  of 
30-23  and  30  of  30-24  (R.  1956). 

Appellants  have  sought  to  create  the  impression 
that  the  Associated  Oil  Company,  which  drilled  the 
three  successful  wells  on  sections  24  and  26  of  30-23 
and  on  30  of  30-24,  has  utterly  abandoned  these  wells 
and  the  lands  around  them.  As  a  matter  of  fact,  this 
is  not  true  and  nothing  is  necessary  to  prove  it  be- 
yond the  testimony  of  appellants '  own  witness  M.  H. 
Whittier  who  was  a  director  of  the  Associated  Oil 
Company  from  1902  or  1903  to  1910  and  from  1911 
to  the  time  when  he  testified.  He  stated  that  he 
owned  over  ten  thousand  shares  of  capital  stock  of 
that  company  of  the  par  value  of  a  hundred  dollars 
each  (R.  1986).  As  stated,  he  was  appellants'  own 
witness.  There  can  be  no  suggestion  that  he  did  not 
know  of  what  he  was  talking.    He  testified  that  the 


440 

Associated  Oil  Company  had  not  abandoned  any  of 
its  property  in  the  Elk  Hills  (R.  1987).  This  fact 
is  further  shown  by  the  evidence  of  the  govermnent's 
witness  J.  W.  Kingsbury  who  in  April,  1913,  ex- 
amined the  wells  in  question  and  took  photographs 
of  them  w^hich  were  introduced  in  evidence  as  ex- 
hibits 11-E,  11-S,  11-T,  11-U,  11-V,  11-W,  11-X,  and 
11-Y  (R.  3692-6).  Kingsbury  testified  that  the  gates 
of  these  wells  were  at  that  time  locked  with  chains 
and  all  three  of  them  were  capped.  He  could  hear 
gas  escaping  from  the  wells  on  sections  24,  26  and  30 
(R.  3694).  Men  were  working  around  the  wells 
painting  the  boilers  and  fixing  them  up  for  the 
Associated  Oil  Company  and  none  of  the  wells  ap- 
peared to  have  been  abandoned.  They  had  merely 
the  appearance  of  being  closed  down.  From  the  well 
on  26  oil  was  coming  out  between  the  casing  and 
running  into  the  sump  about  three  hundred  feet 
away,  the  pressure  on  the  gauge  showing  three  hun- 
dred and  twenty  pounds.  He  estimated  four  hun- 
dred barrels  of  oil  in  the  sump  at  that  time.  Other 
facts  are  set  out  in  the  record  showing  clearly  that 
there  was  no  abandonment,  but  a  mere  temporary 
cessation  of  work  (R.  3695-6). 

CONCLUSION  OF  SUBSEQUENT 
DEVELOPMENT. 

It  is  manifest  that  in  1910  and  1911  the  Associated 
Oil  Company  drilled  three  highly  successful  and 
commercial  wells  in  the  Elk  Hills.  It  is  true  that 
during  the  same  period  other  wells  were  drilled  in 
or  near  the  Elk  Hills  which  for  one  reason  or  an- 


441 

other  did  not  prove  successful.  It  is  possible  that  in 
the  case  of  the  Kinsey  well  no  amount  of  drilling 
might  have  encountered  oil  because  of  the  plunge  of 
the^  anticline  and  the  consequent  depth  of  the  oil 
sands.  Others  were  failures  for  the  same  reason. 
In  most  instances,  however,  failure  was  due  to  in- 
sufficient depth  and  consequent  discouragement  on 
the  part  of  drillers  to  which  the  problem  of  title 
presented  by  the  withdrawal  and  lack  of  funds  were 
contributing  elements.  The  fact  of  the  non-success 
of  these  wells  has  not  even  a  remote  bearing  upon  the 
question  of  the  mineral  character  of  the  lands  in  suit, 
while  the  three  successful  wells  of  the  Associated  Oil 
Company  demonstrate  that  part  of  the  Elk  Hills  is 
commercial  oil  territorv. 

The  evidence  of  development  subsequent  to  patent 
offered  by  appellants  demonstrates  the  mineral  char- 
acter of  the  lands  in  suit.  It  is  bevond  doubt  that  the 
Associated  Oil  Company  but  for  the  withdrawal  of 
September  27,  1909,  would  have  been  entitled  to  and 
could  have  secured  patents  based  upon  the  discov- 
eries which  they  made  upon  sections  24,  26  and  30. 
This  would  be  true  even  if  the  wells  drilled  thereon 
had  been  as  ghastly  failures  as  appellants  have  at- 
tempted to  represent  them.  None  would  have  the 
temerity  to  suggest  that  the  oil  found  in  any  of 
these  three  wells  did  not  constitute  a  discovery. 
Necessarily,  then,  such  discovery  proved  the  mineral 
character  of  the  land ;  for  a  mineral  patent  is  based 
upon  a  discovery  and  it  will  not  be  denied  that  a 
mineral  x^atent  can  be  obtained  only  as  to  mineral 


442 

land.     The  foregoing  propositions  are  not  even  de- 
batable.   Their  soundness  is  self-evident. 

The  grant  excepted  mineral  lands  and  made  pro- 
visions for  indemnity  for  losses  T^'ithin  the  primary 
limits  occasioned  by  locations  prior  to  selection  by 
the  railroad.  It  necessarily  follows  that  the  railroad 
could  not  secure  patent  to  land  upon  which  a  quali- 
fied person  had  by  discovery  perfected  a  mineral 
location.  If  the  Southern  Pacific  Railroad  Com- 
pany were  to-day  to  file  a  selection  list  of  lands  with- 
in its  indemnity  limits  upon  which  qualified  persons 
had  exactly  duplicated  the  wells  which  appellants 
represent  were  drilled  on  the  sections  in  question, 
it  is  not  conceivable  that  it  could  succeed  in  securing 
patent  over  the  protest  of  such  persons.  Unques- 
tionably, such  wells  would  preclude  the  issuance  of 
an  agricultural  patent  to  the  railroad ;  for,  otherwise, 
there  would  be  presented  the  paradox  of  the  same 
land  being  open  to  acquisition  by  one  party  as  min- 
eral land  and  by  another  as  non-mineral  land.  The 
wells  on  24,  26  and  30  demonstrate  the  mineral  char- 
acter of  the  lands  on  which  the}^  are. 

Both  in  the  General  Land  Office  and  in  the  courts 
a  discovery  entitling  its  maker  to  a  mineral  patent  is 
such  a  finding  of  mineral  as  would  warrant  a  man  of 
ordinary  prudence  in  the  further  expenditure  of 
money  in  the  reasonable  expectation  of  developing  a 
paying  property. 

Miller  vs.  Chrisman,  140  Cal.  440;  197  U.  S. 
313. 


443 

Both  ill  the  Land  Department  of  the  govermnent 
and  in  the  courts  it  has  been  repeatedly  held  that  a 
finding  of  mineral  in  commercial  quantity  is  not 
necessary  to  a  discovery. 

Castle  vs.  Wimble,  19  L.  D.  455 

East  Tintic  Cons.  Min.  Co.,  43  L.  D.  79 

Nevada  Sierra  Oil  Co.,  vs.  Home  Oil  Co.,  98 
Fed.  673 

Book  vs.  Justice  Mining  Co.,  58  Fed.  106 

Cascaden  vs.  BartoUs,  146  Fed.  739 

Lange  vs.  Rohinson,  148  Fed.  799 

Miller  vs.  Chrism a/n,  supra. 

The  opinions  in  Nevada  Sierra  Oil  Co.  vs.  Home 
Oil  Co.  and  Cascaden  vs.  BartoUs  were  written  re- 
spectively by  Judge  Ross  and  Judge  Hunt  of  this 
court. 

A  discovery  is  the  foundation  of  the  right  to  a 
mineral  patent.  A  mineral  patent  issues  only  as  to 
mineral  land.  A  finding  of  mineral  in  commercial 
quantity  is  not  necessary  to  a  discovery.  Does  it 
not  inevitabh^  follow  that  a  finding  of  mineral  in 
commercial  quantity  is  not  necessary  to  prove  land 
to  be  mineral  land? 

Compare  the  requisites  of  a  discovery  with  the 
test  laid  down  by  the  Supreme  Court  in  the  Dia- 
mond Coal  &  Col^e  Company  case  for  determining 
in  advance  of  actual  development  what  are  mineral 


444 

lands.  In  the  one  case  it  is  such  a  -finding  or  dis- 
covery as  will  justify  further  expenditures  in  the 
reasonable  expectation  of  developing  a  paying  prop- 
erty. In  the  other  it  is  such  known  conditions  as 
engender  the  belief  that  one  is  justified  in  further 
expenditures.  The  common  element  is  the  justifica- 
tion of  expenditures.  It  cannot  have  been  mere 
chance  that  led  the  Supreme  Court  to  adopt  in  the 
Diamond  Coal  &  Coke  Company  case  a  standard 
similar  to  that  which  that  court  had  approved  as  the 
requisites  of  a  discovery.  But  it  is  to  be  remembered 
that  among  the  known  conditions  was  not  included 
a  discovery — the  rule  is  not  so  strict  as  in  the  case 
of  an  application  for  a  mineral  patent.  If,  then, 
there  has  been  a  discovery  upon  lands,  obviously 
those  lands  may  not  be  acquired  as  non-mineral 
lands,  since  they  are  mineral  lands.  The  wells  on 
24,  26  and  30  are  beyond  all  question  discoveries. 
Accordingly,  the  lands  are  not  patentable  as  non- 
mineral  lands. 

To  be  sure,  24,  26  and  30  are  not  in  suit ;  and  there 
are  no  wells  on  the  lands  in  suit.  But  the  evidence 
as  to  these  wells  was  offered  by  appellants  upon  the 
idea  that  it  would  prove  the  lands  in  suit  non-min- 
eral. If  good  for  that  purpose,  though  ineifective, 
it  is  both  good  and  effective  to  prove  the  mineral 
character  of  the  lands  in  suit. 

By  the  line  of  argument  last  set  out  the  govern- 
ment does  not  intend  to  concede  that  the  wells  in 
question  are  sur-h  as  appellants  have  attempted  to 


445 

represent  them  to  be.  On  the  other  hand,  it  con- 
tends most  emphatically  and  confidently  that  the 
record  proves  them  commercially  productive  and 
commercially  profitable  wells.  All  that  is  intended 
is  to  show  that,  even  if  they  were  no  more  and  no 
better  than  appellants  would  have  them  appear,  they 
demonstrate  the  essential  mineral  character  of  lands 
adjoining  the  lands  in  suit  and  hence,  instead  of 
casting-  doubt  u^Don  the  character  of  the  lands  in 
suit,  justify  the  belief  entertained  by  appellants  in 
1904  which  led  them  to  covet  them  and  made  them 
willing  to  perpetrate  a  glaring  and  reprehensible 
fraud  in  order  to  acquire  them — as  they  also  justify 
the  belief  of  the  Associated  Oil  Company  evidenced 
by  the  large  expenditures  which  it  made  in  1910  and 
1911. 

Respectfullv   submitted, 

F.  P.  HoBGOOD,  Jr., 
Special  Assistant  to  the  Attorney  General, 
Attorney  for  United  States,  appellee. 


446 

ADDENDUM. 

Appellants'  briefs  were  filed  as  the  government's 
brief  was  passing  to  the  printer  and,  therefore,  too 
late  to  admit  of  answer  herein.  However,  one  posi- 
tion is  taken  or  statement  made  by  counsel  for  ap- 
pellants which  is  the  occasion  of  surprise.  At  three 
places  in  their  brief  entitled  "Points  and  Authori- 
ties", namely,  on  pages  75,  94  and  128,  appellants 
state  that  there  was  before  patent  and  while  the 
selection  list  was  pending  a  hearing  in  the  land  office 
upon  the  question  of  the  character  of  the  lands  in 
suit.  On  page  128  the  statement  is :  "There  was  also 
a  hearing  in  the  Land  Office  after  eight  weeks'  no- 
tice to  the  public"  and  reference  is  made  to  page 
3860  of  the  record,  an  examination  of  which  dis- 
closes, not  that  there  was  a  hearing,  but  that,  in 
accordance  with  a  requirement  of  the  Department  of 
the  Interior,  a  notice  was  published  to  the  effect  that 
protests  or  contests  against  the  claim  of  the  South- 
ern Pacific  Eailroad  Company  to  the  lands  in  suit 
"on  the  ground  that  the  same  is  more  valuable  for 
mineral  than  for  agricultural  purposes  will  be  re- 
ceived and  noted  for  report  to  the  General  Land 
Office  at  Washington,  D.  C." 

The  foregoing  notice  was  published  pursuant  to  a 
regulation  of  the  Department  of  the  Interior  made 
July  9,  1894,  which  requires  such  notice  when  lands 
under  selection  "are  found  upon  examination  to  be 
within  a  radius  of  six  miles  from  any  mineral  entry, 
claim  or  location."  19  L.  D.  21,  22.  It  is  entirely 
clear  that  the  record  does  not  support  the  categorical 


447 

statement  of  counsel  tliat  there  was  a  hearing  in  the 
instant  case  and  that  appellants  are  unable  to  show 
any  distinction  between  the  instant  case  and  ZJ.  S. 
YS.  3Iinor,  114  U.  S.  233,  239,  and  Washrngton  Se- 
curities Co.  1 :.  U.  S.,  234  U.  S.  76,  78,  cited  on  page 
94  of  their  brief  and  elsewhere  herein.  These  cases 
are  admitted  by  appellants  to  be  authority  for  the 
position  of  the  government  that,  to  use  their  lan- 
guage, ''where  the  proceedings  are  purely  ex  parte, 
where  no  issue  teas  framed,  where  no  hearing  was 
Jiad,  the  findings  by  the  patent  are  not  conclusive''; 
and  appellants'  specious  attempt  to  import  into  the 
instant  case  a  hearing  which  is  not  even  suggested  in 
the  record  leaves  the  cited  cases  without  differ- 
entiation. 

Tulare  Oil  &  Mining  Co.  vs.  Southern  Pacific  Fail- 
road  Co.,  29  L.  D.  269,  is  a  case  in  which  there  was  a 
hearing — with  what  result  will  be  shown.  This  case 
was  cited  below  upon  another  point  by  appellants, 
but  is  not  mentioned  in  their  briefs  in  this  court. 
There  the  Southern  Pacific  Railroad  Company  had 
filed  a  selection  list,  similar  to  that  in  the  instant 
case,  to  lands  in  the  McKittrick  district  in  30-22. 
Protest  was  filed  by  the  Tulare  Oil  &  Mining  Com- 
pany and,  in  order  to  deceive  the  land  office  and 
suppress  the  true  facts,  negotiations  were  entered 
into  by  the  Southern  Pacific  Railroad  Company  with 
the  Tulare  Oil  &  Mining  Company  as  the  result  of 
which  an  agreement  was  entered  into  that  the  pro- 
test should  not  be  urged,  in  consideration  of  which 
the  railroad  agreed  to  deed  and  did  thereupon  deed 


448 

to  the  Tulare  Company  several  months  before  patent 
a  certain  portion  of  the  selected  land  upon  which  oil 
was  then  being  actually  produced.  That  deed  was 
executed  by  H.  E.  Huntington  as  ijresident  of  the 
Southern  Pacific  Eailroad  Company  February  21, 
1900,  (R.  449,  450,  1,  2  and  3)  ;  and  the  patent,  No. 
104,  is  dated  May  ,  1901.    The  foregoing  facts, 

which  are  not  contradicted,  ajDpear  in  the  testimony 
of  H.  M.  Shreve,  vice-president  and  manager  of  the 
First  National  Bank  of  Tulare,  California,  and  Sec- 
retary of  the  Tulare  Oil  &  Mining  Company.  His 
testimony  is  brief  and  is  found  at  pages  446  to  462 
of  the  record. 

The  Tulare  case  is  important  for  two  reasons.  It 
shows  that,  even  where  there  is  a  hearing  between 
rival  claimants — and  all  of  the  cases  cited  by  ap- 
pellants on  page  94  of  their  brief  show  by  their  titles 
that  thev  were  between  rival  claimants  and  that  the 
govermnent  was  not  a  party — ,  the  government,  not 
being  represented,  is  afforded  no  protection  and  may 
be  easilv  overreached  bv  fraud  and  collusion.  It 
also  exposes  the  record  of  the  Southern  Pacific  Rail- 
road Company  and  demonstrates  its  entire  willing- 
ness to  acquire  lands  from  the  govermnent  in  the 
very  manner  in  which  it  acquired  the  lands  in  suit, 
viz.,  by  fraud  and  misrepresentation  and  "without 
care  as  to  the  means"  by  which  it  profits  at  the  ex- 
pense of  the  public.  Its  conduct  in  the  Tulare  case 
gives  more  than  color  to  its  capacity  and  entire  con- 
tentment to  do  the  things  with  which  it  is  charged 
in  the  instant  case.    Moreover,  it  is  matter  of  serious 


449 


doubt  whether,  when  there  is  a  hearing  between 
individual  claimants,  the  findings  are  conclusive 
against  the  government.  It  is  not  a  party  and  the 
binding  effect  of  the  finding  would  seem  to  be  limited 
to  the  parties. 


°AY    AND    TO    $I.OO    o,f  Jh^         """^  ''°''''^" 
OVERDUE.  ^^    ^"E    SEVENTH     DAY 


-C££JZMI^8AM 


L. 


Sonthem  Pacifio  compaiy 


et  al.,  appellants,  vs, 


United  St a 


tes  of  Americ  a 


p..- 


S74 


c 
c 


404520 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 


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